Greenwashing and credit spread: Evidence from the Chinese green bond market

Guoquan Xu, Nuotian Lu, Yan Tong*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    45 Citations (Scopus)

    Abstract

    This study analyzes how greenwashing affects green bond (GB) pricing. With a unique dataset, we empirically find that greenwashing does exist in the Chinese GB market, leading to higher credit spread compared to that of traditional bonds. However, green bonds with third-party certification have lower credit spread. Furthermore, the heterogeneity of trading venues and issuer ESG performance results in differential effects of third-party certification on GB credit spread. These findings enrich the understanding of green bond pricing and shed light on the development of the GB market.

    Original languageEnglish
    Article number102927
    JournalFinance Research Letters
    Volume48
    DOIs
    Publication statusPublished - Aug 2022

    Keywords

    • Credit spread
    • ESG
    • Fixed income securities
    • Green bond
    • Greenwashing

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