How reactive is investment in US green bonds and ESG-eligible stocks in times of crisis? Exploring the COVID-19 crisis

Javier Perote, José D. Vicente-Lorente and Jose Angel Zuñiga-Vicente

Finance Research Letters, 2023, vol. 53, issue C

Abstract: This study examines how green bonds and environmental, social and governance (ESG) stock market returns have reacted to the COVID-19 crisis in the US. Unlike the Standard and Poor's (S&P) 500 index, the response of green bonds and ESG markets to pandemic progress is nonlinear: A low (large) level of confirmed new cases of COVID-19 has a positive (negative) impact. Furthermore, the implemented containment policies (stringency measures and vaccination campaigns) are positively valued, but their simultaneous use is perceived by investors as a bad signal. Overall, our findings question the resilience of investments in green bonds and ESG markets.

Keywords: ESG indices; Green bonds; Sustainable investment; COVID-19 pandemic; Stringency index (search for similar items in EconPapers)
JEL-codes: G01 G11 G14 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:53:y:2023:i:c:s1544612323000120

DOI: 10.1016/j.frl.2023.103638

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