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Green Preference, Green Investment

Author

Listed:
  • Gao, Zhenyu

    (Chinese University of Hong Kong)

  • Luo, Yan

    (Fudan University)

  • Tian, Shu

    (Asian Development Bank)

  • Yang, Hao

    (Fudan University)

Abstract

Based on Alibaba’s renowned “green” initiative, the Ant Forest program, we develop a novel measure to reveal an individual investor’s nonpecuniary green preference and link it to an individual’s investment actions. We present compelling evidence that supports nonfinancial incentives for investing in green mutual funds while divesting from “brown” funds. Concerns over climate physical and regulatory risks further reinforce this influence. Individuals’ green preferences do not lead to financial gains from trading. Moreover, we mitigate the endogeneity issue by employing the development of a local subway network as a source of variations in green preferences.

Suggested Citation

  • Gao, Zhenyu & Luo, Yan & Tian, Shu & Yang, Hao, 2024. "Green Preference, Green Investment," ADB Economics Working Paper Series 722, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0722
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    More about this item

    Keywords

    nonpecuniary preference; revealed preference; sustainable finance; FinTech;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G50 - Financial Economics - - Household Finance - - - General
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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