Differences Between Green Bonds Versus Conventional Bonds

Hyun, Seungjoon; Park, Donghyun; Tian, Shu

doi:10.1007/978-981-10-8710-3_34-1

Cited by 3 publications

(3 citation statements)

References 3 publications

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“…In addition, poor firms history and a high level of risk may limit the use of this form of investment (BIS, 2017; Immel et al, 2021). Although green ratings and certifications help to fluidify the green bond market by influencing pricing and market depth (among the most recent: Gianfrate & Peri, 2019; Hyun et al, 2021; Kapraun & Scheins, 2019), recent evidence shows that green bonds are often characterized by discount premium compared to traditional bonds (Ehlers & Packer, 2017; Hyun et al, 2019; Kapraun et al, 2021; Karpf & Mandel, 2018; Zerbib, 2019). Thus, the debt market may not be an effective channel for fostering green project financing.…”

Section: Introductionmentioning

confidence: 99%

Syndicated green lending and lead bank performance

Gaudio

Previtali

Sampagnaro

et al. 2022

Financ Manag Account

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This study investigates the effect of the green lending propensity of banks on profitability and risk. Using a sample of 217 green facilities financing syndication worldwide, we create a variable of green lending approach measuring the weight of green loans on total credit exposure of the lead bank and investigate the effect of the green propensity so as the structure of syndication on bank accounting performance. We find two relevant findings. First, a higher propensity to green lending is associated with lower profitability, more moderate default risk, and lower credit risk than banks with a less green investment approach. Second, more collateralization and duration of green lending increase bank performance, while the larger syndicate size reduces profitability and risk. Overall, our study suggests that banks are prone to invest in green projects, but the risks may offset profitability requiring public support to empower the role of the banking sector in boosting ecological transition.

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Section: Introductionmentioning

confidence: 99%

Syndicated green lending and lead bank performance

Gaudio

Previtali

Sampagnaro

et al. 2022

Financ Manag Account

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“…If firms have sub‐optimal disclosure levels ex ante, then the additional disclosure requirements attached to green bonds may bring benefits in terms of a reduction in information asymmetry, which could result in a lower cost of capital and stronger corporate growth (Guo, Lev and Zhou, 2004; Verrecchia, 2001). However, if firms have no sub‐optimal disclosure levels ex ante, then the additional disclosure requirements for green bonds may generate additional administrative and compliance costs (Hyun, Park and Tian, 2019) and a competitive disadvantage (Monk, 2017; Verrecchia, 1983). We hypothesize that firms will trade off the disclosure benefits and costs attached to green bonds’ additional reporting requirements.…”

Section: Hypotheses On the Determinants Of Green Bond Issuancementioning

confidence: 99%

Issuer Motivations for Corporate Green Bond Offerings

Dutordoir

Neto

2023

British J of Management

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Despite the substantial increase in green bond issuance over the past decade, evidence on the drivers and costs of corporate green bond issuance is lacking. We develop four novel hypotheses on the determinants of firms’ choice between green and conventional bonds, by connecting the four distinct features of green bonds with relevant theories. We test these hypotheses on a sample of green and conventional bonds issued by US, Western European and Chinese firms between 2014 and 2021, using linear probability models and alternative approaches. Consistent with our hypotheses, we find that firms with higher reputational gains from being seen as green and a stronger focus on eco‐innovation are more likely to issue green instead of conventional bonds. Conversely, we obtain only limited evidence that green bond issuance is driven by the net benefits of additional disclosure and no evidence that green bond issuers cater to time‐varying investor preferences for corporate greenness. Our results, which survive several robustness tests, are relevant for corporate managers, investors and bond market regulators.

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“…The pricing of corporate green bonds can be affected by numerous factors, such as the credit rating of the company (Gianfrate & Peri, 2019;Hachenberg & Schiereck, 2018;Karpf & Mandel, 2018), the liquidity of the bond trading (Febi et al, 2018), and the raising forms (Hyun et al, 2019). Most particularly, the prices of green bonds will also be affected by the "green label" (Baker et al, 2018;Kanamura, 2020) as well as by the rate of treasury bills and other bonds (Reboredo, 2018).…”

Section: Introductionmentioning

confidence: 99%

Corporate green bonds and carbon performance: An economic input–output life cycle assessment model‐based analysis

Wei

Yongsheng

2022

Bus Strat Env

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Using a proprietary database of corporate green bonds issued in China, we investigate the effect of green bond issuance on firm‐level carbon performance and its impact mechanism. We utilize the Economic Input–Output Life Cycle Assessment (EIO‐LCA) to evaluate corporate carbon performance and use all the 1074 firms that issued corporate bonds in 2009–2018 as the sample group. The empirical results reveal that the companies did not effectively achieve the expected carbon performance improvement post‐issuance. The mechanism analysis suggests that this might have been because the primary motivation for the companies to issue green bonds is to ease their financial constraints. Environmental regulations (at the national and industrial level) play a positive role in the relations between corporate green bond issuance and carbon performance. Overall, the findings raise an alert on the value of Chinese corporate green bonds in climate change mitigation and indicate the need for information disclosure and carbon performance‐linked supervision on green bond issuers.

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Differences Between Green Bonds Versus Conventional Bonds

Cited by 3 publications

References 3 publications

Syndicated green lending and lead bank performance

Syndicated green lending and lead bank performance

Issuer Motivations for Corporate Green Bond Offerings

Corporate green bonds and carbon performance: An economic input–output life cycle assessment model‐based analysis

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