Is Nudging Effective in Promoting Blue Bond Investment? Evidence From Japanese Retail Investors

Kentaka Aruga, Md. Monirul Islam and Arifa Jannat

Sustainable Development, 2025, vol. 33, issue S1, 704-719

Abstract: This study examines how behavioral nudges influence Japanese retail investors' willingness to invest in blue bonds (BBs) denominated in JPY and USD. Using the MINDSPACE framework, which identifies nine key nudges, the study applies the double‐bounded dichotomous choice contingent valuation method (DBDC‐CVM) to assess willingness to invest at different interest rate levels. Data were collected from 1215 investors via an online survey in August 2023. The findings indicate that the messenger and priming nudges lowered the required interest rate for JPY‐denominated BBs, while the other seven nudges had no significant effect. Ensemble machine learning confirmed the importance of these two nudges. Additionally, none of the nudging components influenced investment in USD‐denominated BBs, suggesting that when returns are high, behavioral nudges lose their effectiveness. These results provide insights into the role of behavioral interventions in sustainable finance and highlight the limitations of nudging in shaping investment decisions.

Date: 2025
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https://doi.org/10.1002/sd.70028

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Persistent link: https://EconPapers.repec.org/RePEc:wly:sustdv:v:33:y:2025:i:s1:p:704-719

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