Greener but thinner? Assessing green bond market liquidit

Thomas Dulak and Guntram Wolff

No 07-2026, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: Since the first green bond was issued in 2007, the market has expanded significantly and now accounts for around 3% of the global bond universe. Westudy the liquidity of green bonds. In particular, we are the first to investigategreen bonds’ daily trading volumes and frequency with a unique dataset fromEuroclear. Studying these dimensions of liquidity is particularly important in relatively small markets. Our dataset, covering the period 2020 to 2025, allows us todirectly compare green bonds with conventional bonds. We find that green bondsdo not suffer from a systematic liquidity disadvantage relative to conventionalbonds. On the contrary, they are traded in higher aggregate volumes, drivenby more frequent trading rather than by larger transaction sizes. These differences persist during periods of heightened market-wide stress. Within the greenbond universe, third-party certification is associated with higher trading volumesthrough more intensive trading when bonds are active, while green bonds funding more common project types are traded more regularly than bonds financingmore niche projects

Keywords: Green bonds; Bond liquidity; Trading activity; Market stress; Certification (search for similar items in EconPapers)
JEL-codes: G11 G23 Q56 (search for similar items in EconPapers)
Pages: 41 p.
Date: 2026-03-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-fmk, nep-ifn, nep-mst and nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:eca:wpaper:2013/404323

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