IDEAS home Printed from https://ideas.repec.org/a/taf/jsustf/v10y2020i1p44-64.html
   My bibliography  Save this article

The evolution of pricing performance of green municipal bonds

Author

Listed:
  • Candace Partridge
  • Francesca Romana Medda

Abstract

In this study, we investigated the performance of US green municipal bond compared with general municipal bonds. The performance of this bond sector was assessed with two different approaches: through the creation and benchmarking of a green municipal bond index; and by looking for differences in yields between green municipal bonds and their conventional counterparts. We found that an index comprised of green muni bonds outperforms the closest equivalent S&P index from 2014 to 2018, and there is a statistically significant green premium (‘greenium’) present in the secondary muni bond market of 5 basis points by 2018. There was no conclusive evidence for the presence of greenium at issue in the primary market, but there are some early signs that this could change. These results are key to encouraging growth in the green municipal bond market, which can help American cities to unlock more capital for more sustainable infrastructure projects.

Suggested Citation

  • Candace Partridge & Francesca Romana Medda, 2020. "The evolution of pricing performance of green municipal bonds," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 10(1), pages 44-64, January.
    • Handle: RePEc:taf:jsustf:v:10:y:2020:i:1:p:44-64
    DOI: 10.1080/20430795.2019.1661187
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/20430795.2019.1661187
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/20430795.2019.1661187?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chuc Anh Tu & Tapan Sarker & Ehsan Rasoulinezhad, 2020. "Factors Influencing the Green Bond Market Expansion: Evidence from a Multi-Dimensional Analysis," JRFM, MDPI, vol. 13(6), pages 1-14, June.
    2. Giuseppe Cortellini & Ida Claudia Panetta, 2021. "Green Bond: A Systematic Literature Review for Future Research Agendas," JRFM, MDPI, vol. 14(12), pages 1-29, December.
    3. Akhtaruzzaman, Md & Banerjee, Ameet Kumar & Ghardallou, Wafa & Umar, Zaghum, 2022. "Is greenness an optimal hedge for sectoral stock indices?," Economic Modelling, Elsevier, vol. 117(C).
    4. Juan Camilo Mejía-Escobar & Juan David González-Ruiz & Giovanni Franco-Sepúlveda, 2021. "Current State and Development of Green Bonds Market in the Latin America and the Caribbean," Sustainability, MDPI, vol. 13(19), pages 1-25, September.
    5. K. Thomas Liaw, 2020. "Survey of Green Bond Pricing and Investment Performance," JRFM, MDPI, vol. 13(9), pages 1-12, August.
    6. Kocaarslan, Baris & Soytas, Ugur, 2023. "The role of major markets in predicting the U.S. municipal green bond market performance: New evidence from machine learning models," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    7. Hinsche, Isabelle Cathérine, 2021. "A greenium for the next generation EU green bonds: Analysis of a potential green bond premium and its drivers," CFS Working Paper Series 663, Center for Financial Studies (CFS).
    8. Sreèko Devjak, 2020. "Integrity of the benchmark price for price testing of US municipal bonds," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 38(1), pages 215-235.
    9. Jorge E. Galán & Yong Tan, 2024. "Green light for green credit? Evidence from its impact on bank efficiency," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 531-550, January.
    10. Hirofumi Fukuyama & Yong Tan, 2021. "Corporate social behaviour: Is it good for efficiency in the Chinese banking industry?," Annals of Operations Research, Springer, vol. 306(1), pages 383-413, November.
    11. Jankovic, Irena & Vasic, Vladimir & Kovacevic, Vlado, 2022. "Does transparency matter? Evidence from panel analysis of the EU government green bonds," Energy Economics, Elsevier, vol. 114(C).
    12. Carè, R. & Weber, O., 2023. "How much finance is in climate finance? A bibliometric review, critiques, and future research directions," Research in International Business and Finance, Elsevier, vol. 64(C).
    13. Yevheniia Antoniuk & Thomas Leirvik, 2021. "Climate Transition Risk and the Impact on Green Bonds," JRFM, MDPI, vol. 14(12), pages 1-19, December.
    14. Kentaka Aruga & Md. Monirul Islam & Yoshihiro Zenno & Arifa Jannat, 2022. "Developing Novel Technique for Investigating Guidelines and Frameworks: A Text Mining Comparison between International and Japanese Green Bonds," JRFM, MDPI, vol. 15(9), pages 1-17, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jsustf:v:10:y:2020:i:1:p:44-64. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TSFI20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.