The Demand for Green Bonds

68 Pages Posted: 22 Apr 2023

See all articles by Hari Gopal Risal

Hari Gopal Risal

University of Strathclyde; Kathmandu University

Chandra Thapa

University of Strathclyde

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School

Biwesh Neupane

Department of Accounting and Finance, University of Strathclyde Business School

Arthur Krebbers

University of Strathclyde - Department of Accounting and Finance

Date Written: April 1, 2023

Abstract

Drawing on signaling theory and socially responsible investment principles, we investigate whether the demand for corporate green bonds (GB) relative to similar non-green bonds (non-GB) is higher in the primary market. Leveraging unique information on the orderbook size of corporate bonds issued globally from 2013 to 2022, we find that, on average, the demand for GB is about 42 to 55% higher than comparable non-GB. Furthermore, we identify critical drivers of GB's demand: higher environmental, social, and governance (ESG) performance, lower ESG risk, and higher investments in green innovations are associated with higher demands for GB.

Keywords: JEL classifications: G14, G18, G32, M14, Q56 Green Bond Demand, Signaling Theory, Socially Responsible Investment Principles, ESG Performance, ESG Risk, Green Innovations

JEL Classification: G14, G18, G32, M14, Q56

Suggested Citation

Risal, Hari Gopal and Thapa, Chandra and Marshall, Andrew P. and Neupane, Biwesh and Krebbers, Arthur, The Demand for Green Bonds (April 1, 2023). Available at SSRN: https://ssrn.com/abstract=4419543 or http://dx.doi.org/10.2139/ssrn.4419543

Hari Gopal Risal (Contact Author)

University of Strathclyde ( email )

United Kingdom
07361822421 (Phone)

HOME PAGE: http://https://www.strath.ac.uk

Kathmandu University ( email )

+447443771664 (Phone)

Chandra Thapa

University of Strathclyde ( email )

16 Richmond Street
Glasgow 1XQ, Scotland G1 1XQ
United Kingdom

HOME PAGE: http://https://www.strath.ac.uk/staff/thapachandradr/

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 548 3894 (Phone)

Biwesh Neupane

Department of Accounting and Finance, University of Strathclyde Business School

199 Cathedral Street
Glasgow, G4 0QU
United Kingdom

Arthur Krebbers

University of Strathclyde - Department of Accounting and Finance

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