DOES TRANSPARENCY PAY OFF FOR GREEN BOND ISSUERS? EVIDENCE FROM EU STATE AGENCIES’ GREEN BONDS

Vlado Kovačević; Irena Janković; Vladimir  Vasić; Isidora Lj. Ljumović

doi:10.59267/ekoPolj2304997K

Authors

Vlado Kovačević The Institute of Agricultural Economics, Volgina 15, Belgrade, Serbia https://orcid.org/0000-0002-2902-6496
Irena Janković University of Belgrade – Faculty of Economics and Business, Kamenička 6, Belgrade, Serbia https://orcid.org/0000-0003-1115-4702
Vladimir Vasić Belgrade Banking Academy, Zmaj Jovina 12, Belgrade, Serbia https://orcid.org/0000-0001-9694-8071
Isidora Lj. Ljumović Institute of Economic Sciences, Zmaj Jovina 12, Belgrade, Serbia https://orcid.org/0000-0002-8603-9672

DOI:

https://doi.org/10.59267/ekoPolj2304997K

Keywords:

Green bonds, transparency, bond yield, EU state agencies, use of proceeds

Abstract

This paper investigates the impact of transparent allocation of proceeds on green bonds’ yields, providing insights to green bonds’ issuers for optimizing their financing terms. Using data from the EU state agencies’ green bond market, we applied a Prais-Winsten regression model with correlated panels corrected standard errors and common AR(1) to estimate the relationship between green bonds’ yields and various factors, including the transparency of proceeds. Transparent allocation of proceeds has a negative effect on green bonds’ yields, confirming that investors require lower returns when they are well-informed about a bond’s environmental goals. Additionally, higher credit ratings, and shorter remaining maturity are associated with lower green bonds’ yields. Transparent use of proceeds significantly influences green bonds’ yields, demonstrating that specifying the use of bond proceeds for environmentally friendly projects can lead to more favorable financing terms. Future research direction should provide additional classification of the green bonds’ transparency.

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