Abstract
This paper is a survey of recent academic developments in the literature on green bonds, which have become an important financial instrument in socially responsible investment. This study provides a review of papers that study the market pricing of green bonds, the economic and environmental effects of green bond financing, as well as legal and institutional issues in the green bond market. The literature on market pricing focuses mainly on the existence of greenium, which represents the extent to which green bonds carry a price premium over otherwise identical non-green counterparts. The literature on the economic and environmental effects mainly concerns stock market reaction to green bond issuance and associated economic value implications to other stakeholders, as well as investment in green projects. This paper discusses current issues in the green-bond market and avenues for future research.
Highlights
Responsible investing (SRI) has become one of the most important issues in finance
Studies in the literature examine the “greenium” or the price premium that investors are willing to pay for green bonds that they would not pay for their non-green counterparts
We find that more studies report positive evidence for the greenium, the results vary depending on sample selection and empirical methodology
Summary
Responsible investing (SRI) has become one of the most important issues in finance. Studies in the literature examine the “greenium” or the price premium that investors are willing to pay for green bonds that they would not pay for their non-green counterparts.
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