Xintong Zhan, Junting Liu, Jie Cao, Ruijing Yang, Linyu Zhou
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Abstract
This paper investigates the impact of green bond issuance on the yield spreads of conventional bonds in China. Using a sample of 1468 corporate bonds and a difference-in-differences methodology, we document a significantly persistent reduction of 21 basis points in the yield spreads of existing conventional bonds after the green bond issuance. Our findings support a risk-based explanation: green bond issuance mitigates the environmental regulatory risks faced by the issuer, thereby reducing the perceived default risk of its conventional bonds. These results highlight the broader financial implications of green bond issuance, extending beyond the direct environmental benefits to influence the pricing and risk profile of conventional debt instruments.
期刊介绍：
The goal of the Asian Economic Policy Review is to become an intellectual voice on the current issues of international economics and economic policy, based on comprehensive and in-depth analyses, with a primary focus on Asia. Emphasis is placed on identifying key issues at the time - spanning international trade, international finance, the environment, energy, the integration of regional economies and other issues - in order to furnish ideas and proposals to contribute positively to the policy debate in the region.
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