Green Bonds Pay When Trustworthy
Stuart School of Business research presentation by: Associate Professor of Finance Sang Baum “Solomon” Kang
Green Bonds Pay When Trustworthy
- Associate Professor of Finance Sang Baum “Solomon” Kang
This is co-authored research with Jiyong Eom, Korea Advanced Institute of Science and Technology.
Abstract:
Green bonds are fixed-income securities whose principal exclusively applies to green projects. We investigate whether green bonds reduce the cost of capital for climate mitigation and adaptation projects. Using a matching method of green and brown bond yields at issue, we find evidence for the reduced cost of capital. Analyzing CO2 emission intensity and RE100 membership, we find evidence that the green bond premium is more negative as exposure to carbon transition risk and the management capability are higher. Additionally, we report that greenium, or green premium, becomes more negative for non-investment grade bonds.
All Illinois Tech faculty, students, and staff are invited to attend.
The Friday Research Presentations series showcases ongoing academic research projects conducted by Stuart School of Business faculty and students, as well as guest presentations by Illinois Tech colleagues, business professionals, and faculty from other leading business schools.