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Green bonds versus conventional bonds: is there a differentiated demand in Mexico?

Author

Listed:
  • Rogelio Arellano Cadena

    (Banco de México)

  • Lucía Pérez Delgado

    (Universidad Anáhuac México)

Abstract

Is the demand for green bonds different from the demand for conventional bonds? Previous analysis that compare financial returns between green and conventional bonds (Asian Bond Monitor, 2018; Ehlers and Packer, 2017; Reboredo, Quintela y Otero, 2017; Östlund, 2015, and Zerbib, 2016, 2019) show, in most cases, that green bonds have a lower return than conventional bonds. No study comparing such bonds has yet been done for Mexico. This study aims to close such gap, intending to identify if investors have a differentiated demand for green bonds with respect to comparable conventional bonds. Contrary to previous analysis that compare observed returns, we use the ask prices for green and conventional bonds issued either on the same date or with the same maturity by the same institution. The results suggest that the distribution on ask prices differ between green and conventional bonds. Additionally, there is a negative difference in their mean returns for bonds with the same maturity.

Suggested Citation

  • Rogelio Arellano Cadena & Lucía Pérez Delgado, 2019. "Green bonds versus conventional bonds: is there a differentiated demand in Mexico?," The Anahuac Journal, Business and Economics School. Anahuac University (Mexico)., vol. 19(1), pages 59-92, June.
    • Handle: RePEc:amj:journl:v:19:y:2019:i:1:p:59-92
    DOI: 10.36105/theanahuacjour.2019v19n1.03
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    More about this item

    Keywords

    green bonds; conventional bonds; environmental risks;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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