Does transparency matter? Evidence from panel analysis of the EU government green bonds

The aim of this research is to amend traditional theories on bond pricing with additional determinants specific to green bonds. We introduce a new term, 'green bond transparency', and apply panel data analysis to EU gov-ernment green bonds. Bonds that aim to finance a specific project are considered transparent, while they are classified as non-transparent if the proceeds are used to finance a range of projects or their use is to be deter-mined later. We empirically confirm the significant effect of transparency on green bond yields. The practical implication of the findings is the creation of a foundation for issuing green bonds under more favorable financing conditions.

Automated summary

The aim of this research is to amend traditional theories on bond pricing by introducing additional determinants specific to green bonds. The study confirms the significant effect of transparency on green bond yields through empirical analysis of EU government bonds. The practical implication of these findings is the potential for issuing green bonds under more favorable financing conditions.