Do bond attributes affect green bond yield? Evidence from Indian green bonds

Author:

Abhilash 1ORCID,S. Shenoy Sandeep2ORCID,K. Shetty Dasharathraj3ORCID,N. Kamath Aditi4ORCID

Affiliation:

1. Junior Research Fellow, Department of Commerce, Manipal Academy of Higher Education

2. Dr, Professor and Head, Department of Commerce, Manipal Academy of Higher Education

3. Dr, Associate Professor, Department of Data Science and Computer, Applications, Manipal Academy of Higher Education

4. Research Scholar, Department of Commerce, Manipal Academy of Higher Education

Abstract

Over the years, green finance tools have gained considerable attention with the increased concern to achieve sustainability in the economy. Green bonds are one such new innovative green finance tool embodied with bonds and green attributes. However, research on the Indian green bond is relatively modest. Thus, this study aims to analyze the impact of bond attributes on green bond yield. The study retrieves green bond data from the Bloomberg and Climate Bonds Initiative databases from 2015 to 2022. To test the framed hypotheses, the study employs a panel regression technique with a random effect model. The findings of the study show a significant positive effect of bond ratings (β = 2.80926, p < 0.05) on green bond yield based on the argument that good-rated bonds serve as collateral in the security market. On the contrary, the result also reveals a significant negative effect of bond maturity (β = –0.327296, p < 0.05) and bond label (β = –3.16480, p < 0.05) on green bond yield. The results based on the observation suggest that when the certified bond is issued, this signals the greenness of the bond in the market and attracts high demand, whereas the long maturity ensures the green project construction for a longer period, resulting in a lower bond value. Thus, empirical findings reveal that bond attributes are the major factors in influencing bond yield. The obtained results serve as a prerequisite for potential issuers, investors, and policymakers to further popularize the green bond in the country.

Publisher

LLC CPC Business Perspectives

Subject

Management, Monitoring, Policy and Law,Public Administration,Economics and Econometrics,Environmental Science (miscellaneous),Renewable Energy, Sustainability and the Environment,Geography, Planning and Development,Global and Planetary Change

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