Identification and pricing of labelled green bonds

Vikram Singh, Sonali Jain and Shveta Singh

Finance Research Letters, 2025, vol. 73, issue C

Abstract: This paper precisely splits green bonds into ‘externally labelled’ (externally verified for greenness) and ‘internally labelled’ (unverified) instead of ‘self-reported’ and ‘non-self-reported’; and compares at-issuance yields between externally and internally labelled green bonds. We estimate yield differentials through mean difference and linear regression on post-matching samples. The verified green bonds register lower yields than the unverified ones. This implies lower risk in verified green bonds, culminating in interest cost savings to issuers. The cost advantage sustains in alternate samples but vanishes in adverse business scenarios. This paper calls for early regulation of the external labelling market before the cost advantage evaporates.

Keywords: Green bond pricing; Yield differential; Green labelling; Municipal bond; Propensity score matching (search for similar items in EconPapers)
JEL-codes: G12 G14 G32 G38 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324017203
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324017203

DOI: 10.1016/j.frl.2024.106691

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().