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Can Labeled Green Bonds Reduce Financing Cost in China?

Author

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  • Zhen Sun

    (School of Banking & Finance, University of International Business and Economics, Beijing 100029, China)

  • Jianfen Feng

    (School of Banking & Finance, University of International Business and Economics, Beijing 100029, China)

  • Rongxi Zhou

    (School of Banking & Finance, University of International Business and Economics, Beijing 100029, China)

  • Yue Yu

    (The Export-Import Bank of China, Beijing 100031, China)

  • Yaojian Deng

    (School of Banking & Finance, University of International Business and Economics, Beijing 100029, China)

Abstract

From the perspective of financing cost, this article investigates the benefits of green bonds to the issuer. Based on 227 green bonds and 405 conventional bonds selected from China’s bond market, we find that (1) green bonds can decrease financing cost by at least 15 bps in the primary market, which is more significant than the effect in the secondary market; (2) third-party certification can strengthen the ‘greenium’ of green bonds in both the primary and secondary markets; and (3) there is no ‘greenium’ effect for financial green bonds in either primary or secondary markets in China, even for green bonds with third-party certification.

Suggested Citation

  • Zhen Sun & Jianfen Feng & Rongxi Zhou & Yue Yu & Yaojian Deng, 2022. "Can Labeled Green Bonds Reduce Financing Cost in China?," Sustainability, MDPI, vol. 14(20), pages 1-14, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:20:p:13510-:d:947218
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    Cited by:

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    2. Huacheng Rao & Dongxu Chen & Feichao Shen & Yangyang Shen, 2022. "Can Green Bonds Stimulate Green Innovation in Enterprises? Evidence from China," Sustainability, MDPI, vol. 14(23), pages 1-19, November.
    3. Qiyue Zhang & Yanli Wang & Qian Chen, 2024. "How Does Green Bond Issuance Facilitate the Spillover Effect of Green Technology Innovation in Industry? Evidence from China," Sustainability, MDPI, vol. 16(17), pages 1-19, September.

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