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.
| Original language | English |
|---|---|
| Pages (from-to) | 72-82 |
| Number of pages | 11 |
| Journal | Asian Economic Policy Review |
| Volume | 21 |
| Issue number | 1 |
| Early online date | 26 Aug 2025 |
| DOIs | |
| Publication status | Published - Jan 2026 |
Keywords
- conventional bonds
- default risk
- environmental regulatory risk
- green bond issuance
- yield spreads
ASJC Scopus subject areas
- General Economics,Econometrics and Finance
- Political Science and International Relations
- Management, Monitoring, Policy and Law
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