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Green bond credit spreads and bank loans in China

Author

Listed:
  • Wang, Congcong
  • Wang, Chong
  • Long, Huaigang
  • Zaremba, Adam
  • Zhou, Wenyu

Abstract

Green finance is increasingly important in both academia and industry, yet the relationship between green bonds and bank loans remains largely understudied. In this study, we conduct an empirical investigation into the impact of the credit spreads of green bonds on the structure of debt financing. Our findings suggest that companies with larger credit spreads on green bonds in the secondary market tend to experience a higher growth rate in new bank loans. The presence of such credit spreads in the secondary market exacerbates corporate financing constraints and information asymmetry. This dynamic fosters implicit collusion between enterprises and banks, enhancing the firms' ability to secure bank loans. This research sheds light on the economic implications of the credit spreads of green bonds from the banks' perspective and offers valuable insights for optimizing credit strategies and detecting greenwashing behavior among banks and investors.

Suggested Citation

  • Wang, Congcong & Wang, Chong & Long, Huaigang & Zaremba, Adam & Zhou, Wenyu, 2024. "Green bond credit spreads and bank loans in China," International Review of Financial Analysis, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:finana:v:94:y:2024:i:c:s1057521924002321
    DOI: 10.1016/j.irfa.2024.103300
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    More about this item

    Keywords

    Credit spread; Green bonds; Bank loans; Corporate financing constraints; Information asymmetry; Greenwashing;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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