Differences Between Green Bonds Versus Conventional Bonds

An Empirical Exploration
  • Suk HyunEmail author
  • Donghyun Park
  • Shu Tian
Living reference work entry
Part of the Sustainable Development book series (SD)


This chapter empirically investigates how the green bond markets price greenness. Using the liquidity-adjusted yield premium of green bonds over their synthetic conventional bonds, this study explores the possible determinants that drive green bond premiums. Evidence shows that, on average, there is no significant yield premium or discount on green bonds compared with their paired conventional bonds. Interestingly, in the case of a subsample, such as the euro and the US dollar, to control for the currency effect, most explanatory variables are not statistically significant, which suggests that a green bond premium does not exist in dollar-denominated and euro-denominated bonds, while a green bond premium does exist in other currency-denominated bonds. However, green bonds are also not standardized instruments. Certain factors, like “greenness,” are necessary to match the needs of issuers and investors. These factors might have an impact on the price, liquidity, and volatility of green bonds.


Green bond Green premium Market development 

JEL Classification

G12 G14 G19 


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Copyright information

© Asian Development Bank Institute 2019

Authors and Affiliations

  1. 1.East Asia International CollegeYonsei UniversityWonjuRepublic of Korea
  2. 2.Economic Research and Regional Cooperation DepartmentAsian Development BankManilaPhilippines

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