 Preferred habitat investors in the green bond marketWorking Papers from DNB Abstract: In recent years, the green bond market has seen significant growth as a means of financing environmentally-friendly projects. However, while much research has focused on pricing, little attention has been given to the investors who hold these bonds. This paper uses a preferred habitat framework to analyze the preferences of European investors for green bonds. By analyzing a confidential dataset of portfolio holdings from 2016-Q4 to 2022-Q4, the study finds that European investors, particularly mutual funds and pension funds, show a high demand for green bonds. In contrast, insurance corporations and households tend to avoid green bonds. The research also suggests that the demand for green bonds among mutual funds and pension funds is price inelastic, while banks and insurance corporations display an elastic demand. The findings highlight the presence of a preferred habitat for green bonds among European mutual funds and pension funds. These findings are robust for potential endogeneity concerns when we apply matching techniques, are stronger for domestic green bonds, and also apply to sustainability-linked bonds. Keywords: green bonds; preferred habitat; institutional investors; securities holdings statistics; greenium; climate change; environmental impact; sustainability-linked bonds; portfolio holdings (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:773 Access Statistics for this paper More papers in Working Papers from DNB Contact information at EDIRC. |
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