Is the Government always greener?

48 Pages Posted: 20 Mar 2024

See all articles by Caterina Di Tommaso

Caterina Di Tommaso

University of Bari

Salvatore Perdichizzi

University of Bologna

Samuel A. Vigne

Luiss Guido Carli University - Luiss Business School

Andrea Zaghini

Bank of Italy

Date Written: February 23, 2024

Abstract

This research focuses on the cost of financing green projects on the primary bond market and tests for a potential price differential between green bonds issued by government entities and those issued by supranational and private sector issuers. Our findings indicate that government entities benefit from more favorable pricing conditions worldwide. This advantage is growing over time and particularly pronounced for sovereigns and municipal authorities. Our analysis also reveals that country-specific factors, such as strong political commitment to address climate change, low income level and high degree of indebtedness are significant predictors of the pricing spread across bonds.

Keywords: Green bonds, Sovereign debt, Yield spread, Greenium

JEL Classification: G15, G32, H63, C21

Suggested Citation

DI TOMMASO, CATERINA and Perdichizzi, Salvatore and Vigne, Samuel A. and Zaghini, Andrea, Is the Government always greener? (February 23, 2024). Available at SSRN: https://ssrn.com/abstract=4746637 or http://dx.doi.org/10.2139/ssrn.4746637

CATERINA DI TOMMASO

University of Bari

Salvatore Perdichizzi

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Samuel A. Vigne

Luiss Guido Carli University - Luiss Business School ( email )

Via Nomentana, 216
Roma, 00162
Italy

Andrea Zaghini (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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