Paying More for the Environmentally Clean Future? Evidence from Green Bonds Yield Premium

Student: Zaytseva Maria

Supervisor: Luca Gelsomini

Faculty: International College of Economics and Finance

Educational Programme: Financial Economics (Master)

Year of Graduation: 2021

The main idea of the proposed paper is to study whether investors, who are interested in the green investments pays more for the green bonds. The study also examines different proxies for the liquidity of the bonds. The research sample consists of more than 70 different paired bonds from different countries and industries. The other research question is to examine whether polluting firms pays different to the investors. The result shows that the green bonds have a statistically significant yield premium, equals to c. 1.35% compared with the same conventional bonds, while the polluting firms’ green bonds pays on average 1% more for their green bonds. Moreover, the bid ask spread was proved to be a consistent and statistically significant proxy of the bond liquidity.

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