Does transparency pay off for green bonds’ issuers? : evidence from EU state agencies’ green bonds

Kovačević, Vlado and Janković, Irena and Vasić, Vladimir and Ljumović, Isidora (2023) Does transparency pay off for green bonds’ issuers? : evidence from EU state agencies’ green bonds. Economics of Agriculture, 70 (4). pp. 997-1007. ISSN 0352-3462

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Abstract

This paper investigates the impact of transparent
allocation of proceeds on green bonds’ yields, providing
insights to green bonds’ issuers for optimizing their
financing terms. Using data from the EU state agencies’
green bond market, we applied a Prais-Winsten regression
model with correlated panels corrected standard errors
and common AR(1) to estimate the relationship between
green bonds’ yields and various factors, including the
transparency of proceeds. Transparent allocation of
proceeds has a negative effect on green bonds’ yields,
confirming that investors require lower returns when they
are well-informed about a bond’s environmental goals.
Additionally, higher credit ratings, and shorter remaining
maturity are associated with lower green bonds’ yields.
Transparent use of proceeds significantly influences green
bonds’ yields, demonstrating that specifying the use of
bond proceeds for environmentally friendly projects can
lead to more favorable financing terms. Future research
direction should provide additional classification of the
green bonds’ transparency.

Item Type:	Article
Additional Information:	COBISS.ID=141737993
Uncontrolled Keywords:	green bonds, transparency, bond yield, EU state agencies, use of proceeds
Research Department:	Macroeconomics
Depositing User:	Jelena Banovic
Date Deposited:	08 Apr 2024 12:46
Last Modified:	08 Apr 2024 12:46
URI:	http://35.240.28.64/id/eprint/2040
Author Links:	[error in script] No links available.

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