A new approach of energy financing: The yields of green bonds in emerging economies

Abstract

This study focuses on a relatively new financial asset, namely the green bond which is particularly used to finance environmentally friendly and climate stimulating projects. From a point of business view, the financial performance of assets naturally affects the investment decisions of actors including policymakers, governments and investors. Focusing on this angle, this study aims at analyzing and comparing the yields of green bonds and equivalent conventional peers in emerging economies including Brazil, China, Czech Republic, Korea, Malaysia and Taiwan. In this context, firstly, green financing and green bonds introduced. Afterwards, based on the literature review, we employ a matching method to test the yield differences among the bonds. The analyses have resulted in mixed findings. The descriptive statistics show that on average green bonds offer a higher yield than conventional bonds in China, Czech Republic and Malaysia, whereas they provide lower yields in Brazil, Korea and Taiwan. However, considering the findings as a whole, the differences between the yields are not statistically significant.