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Green bond issuance and trade credit access: Evidence from Chinese bond market

Author

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  • Gan, Xiao Dong
  • Zheng, Xiao Yu
  • Li, Cong Cong
  • Zhu, Gui Qin

Abstract

The Chinese bond market has achieved rapid development and gained widespread social attention. This study constructed a sample of corporate bonds in China and tested the impact of green bond issuance on trade credit. We found supply chain spillovers from green bonds, with firms that issue green bonds receiving more trade credit than firms that issue credit bonds. Results remain robust after the propensity score matching, entropy balancing, and instrumental variable approaches to mitigate endogeneity issues. Information asymmetry and social trust can enhance the impact of green bonds on trade credit. The spillover effects are more pronounced among unlisted companies, companies with higher bond ratings, non-polluting industries, and state-owned companies. This study provides insights into the role of green bonds in reducing information asymmetry and enhancing mutual trust in the supply chain.

Suggested Citation

  • Gan, Xiao Dong & Zheng, Xiao Yu & Li, Cong Cong & Zhu, Gui Qin, 2024. "Green bond issuance and trade credit access: Evidence from Chinese bond market," Finance Research Letters, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:finlet:v:60:y:2024:i:c:s154461232301214x
    DOI: 10.1016/j.frl.2023.104842
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    More about this item

    Keywords

    Green bond; Trade credit; Supply chain spillovers; Signaling; Environmental commitments;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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