Can Labeled Green Bonds Reduce Financing Cost in China?

Zhen Sun, Jianfen Feng, Rongxi Zhou, Yue Yu and Yaojian Deng ()
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Zhen Sun: School of Banking & Finance, University of International Business and Economics, Beijing 100029, China
Jianfen Feng: School of Banking & Finance, University of International Business and Economics, Beijing 100029, China
Rongxi Zhou: School of Banking & Finance, University of International Business and Economics, Beijing 100029, China
Yue Yu: The Export-Import Bank of China, Beijing 100031, China
Yaojian Deng: School of Banking & Finance, University of International Business and Economics, Beijing 100029, China

Sustainability, 2022, vol. 14, issue 20, 1-14

Abstract: From the perspective of financing cost, this article investigates the benefits of green bonds to the issuer. Based on 227 green bonds and 405 conventional bonds selected from China’s bond market, we find that (1) green bonds can decrease financing cost by at least 15 bps in the primary market, which is more significant than the effect in the secondary market; (2) third-party certification can strengthen the ‘greenium’ of green bonds in both the primary and secondary markets; and (3) there is no ‘greenium’ effect for financial green bonds in either primary or secondary markets in China, even for green bonds with third-party certification.

Keywords: labeled green bond; greenium; credit spread; financing cost (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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