Green Bond Market Development and Stock Market Reactions in Asia: A Descriptive and Event-Study Analysis

Latansa Izzata Dien Elam and Martina Nardon ()
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Latansa Izzata Dien Elam: C
Martina Nardon: Ca’ Foscari University of Venice

No 2026: 19, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: Green bonds have become a key instrument for financing projects with environmental and climate-related benefits, amid the rapid growth of ESG investments across institutional, wealth, and retail investors. While the global green bond market has expanded substantially across both developed and emerging economies, evidence on how equity investors respond to green bond issuances in Asian markets remains limited. This paper examines stock market reactions to green bond announcements by publicly listed firms in Asia over the period 2014–2025. It combines a descriptive overview of green bond market development across major Asian economies with an event-study analysis based on the market model, used to estimate cumulative abnormal returns around announcement dates. The empirical analysis considers heterogeneity across countries, sectors, first-time and repeated issuances, developed and developing markets, sub-periods, and the pre- and post-COVID periods. The results show no statistically significant aggregate stock market reaction across alternative event windows. However, responses vary across countries and sectors, suggesting that equity investors may assess green bond announcements differently depending on the institutional context and the credibility or materiality of the underlying environmental commitment. Overall, the findings indicate that, in Asian equity markets, green bond issuance is generally perceived as a neutral financing decision rather than a systematic short-term value-creating event. The paper contributes by documenting the evolution of Asian green bond markets and by providing baseline empirical evidence on the equity-market implications of green bond announcements in the region.

Keywords: Sustainable Finance; Green Bonds; Stock Market Reaction; Event Study; Asian Markets (search for similar items in EconPapers)
JEL-codes: G14 G15 G23 Q56 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2026
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