 Going Green: Effect of green bond issuance on corporate debt financing costsQingsong Ruan, Chengyu Li, Dayong Lv and Xiaokun Wei The North American Journal of Economics and Finance, 2025, vol. 75, issue PA Abstract: This paper investigates the influence of green bond (GB) issuance on the credit spread of non-green bonds (NGBs) issued by the same firm. Based on Chinese bond market data from 2013 to 2021, our results show that GB issuers experience a decline in NGB credit spreads after issuing GBs, indicating that “going green” can lower corporate debt financing costs. This beneficial effect is more salient among firms with lower bond liquidity, supporting the “bond liquidity story” that investors anticipate increased bond liquidity following GB issuance and thus charge lower credit spreads. In contrast, we find limited evidence for alternative explanations such as the “default risk story,” “halo effect story,” or “information asymmetry story.” Our research highlights the financial benefits of GB issuance and contributes to related literature on the economic implications of green finance. The findings also offer valuable insights for policymakers and corporate executives seeking to promote sustainable investment. Keywords: Green bond; Credit spread; Corporate debt financing cost; Bond liquidity; Green finance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:75:y:2025:i:pa:s1062940824002249 DOI: 10.1016/j.najef.2024.102299 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
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