Abstract

We examine the effect of degree of compliance with the Green Bond Principles (GBP) on investor demand for such bonds, using cross-sectional data for all countries in the Green Bond market over the period 2007-2019. We find a significantly positive effect of higher compliance with the GBPs on investor demand, as measured by Bid-Ask-Spread and Yield-spread, after controlling for common bond-specific and macroeconomic variables. However, our results showed no evidence that macroeconomic factors influenced Green Bond investments. Moreover, we also find a positive effect on investor demand when a bond is issued by a government agency, even if the degree of compliance is low.

Keywords: Bond Market, Bid-ask spread, Green Bonds, Green Bond Principles, Compliance, Investor demand, Sustainability

How to Cite:

Nanayakkara, M. & Colombage, S., (2022) “Does Compliance to Green Bond Principles Matter? Global Evidence”, Australasian Accounting, Business and Finance Journal 16(3), 21-39. doi: https://doi.org/10.14453/aabfj.v16i3.03