Abstract
This paper investigates whether green bonds offer investors in China an attractive yield compared to other equivalent conventional bonds. By applying a matching method and, subsequently, fixed-effect estimation, our empirical results reveal a significant negative yield premium of green bonds on average-1.8 bps lower than that of their conventional counterparts in the Chinese secondary market.
Furthermore, we find that green bond premiums vary across issuers' business sectors, mainly due to the public reputation of bond issuers. We also show that bond credit rating and corporate ESG rating have a significant impact on green bond premiums.
Our results point to some practical implications for policymakers and investors. (C) 2022, The Author(s), under exclusive license to Springer Nature Switzerland AG.