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Drivers of green bond issuance and new evidence on the “greenium”

Author

Listed:
  • Kristin Ulrike Löffler

    (Jönköping University)

  • Aleksandar Petreski

    (Jönköping University)

  • Andreas Stephan

    (Jönköping University)

Abstract

This paper examines whether a premium for green bonds, called “greenium”, found in previous studies, exists in primary and secondary bond markets. Using a universe of about 2000 green and 180,000 non-green bonds from 650 international issuers, we apply both propensity score matching and coarsened exact matching to determine a sample of conventional bonds that is most similar to the sample of green bonds. We find that green bonds have larger issue sizes and lower rated issuers, on average, compared to conventional bonds. The estimates show that the yield for green bonds is, on average, 15–20 basis points lower than that of conventional bonds, both on primary and secondary markets, thus a “greenium” exists.

Suggested Citation

  • Kristin Ulrike Löffler & Aleksandar Petreski & Andreas Stephan, 2021. "Drivers of green bond issuance and new evidence on the “greenium”," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(1), pages 1-24, March.
    • Handle: RePEc:spr:eurase:v:11:y:2021:i:1:d:10.1007_s40822-020-00165-y
    DOI: 10.1007/s40822-020-00165-y
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    References listed on IDEAS

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