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The Impact of ECB Corporate Sector Purchases on European Green Bonds

Author

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  • Franziska Bremus
  • Franziska Schütze
  • Aleksandar Zaklan

Abstract

This papers analyzes the effect of the ECB’s Corporate Sector Purchase Programme (CSPP) and the recent Pandemic Emergency Purchase Programme (PEPP) on the yields of eligible green bonds, a new but rapidly growing segment of the corporate bond market. We exploit these policy changes using a difference-in-differences strategy, with ineligible corporate green bonds issued in euro, U.S. dollars and Swedish crowns as comparison groups. We find that both programs significantly improve financing conditions for eligible green bonds, thereby increasing the attractiveness of these instruments to issuers and of the euro area as a location of issuance. The effects of the CSPP and PEPP are heterogeneous, both in terms of average impact and persistence of the effects. Yield differences between eligible and ineligible green bonds can last for more than six months. Our analysis informs the debate about new financing options for firms as well as about effects of asset purchase programs on the transition towards a less carbon-intensive economy.

Suggested Citation

  • Franziska Bremus & Franziska Schütze & Aleksandar Zaklan, 2021. "The Impact of ECB Corporate Sector Purchases on European Green Bonds," Discussion Papers of DIW Berlin 1938, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1938
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    Cited by:

    1. Zaghini, Andrea, 2024. "Unconventional green," Journal of Corporate Finance, Elsevier, vol. 85(C).
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    3. Rüdiger Fahlenbrach & Eric Jondeau, 2023. "Greening the Swiss National Bank’s Portfolio," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 12(4), pages 792-833.
    4. Donato Masciandaro & Riccardo Russo, 2022. "Central Banks and Climate Policy: Unpleasant Trade–Offs? A Principal–Agent Approach," BAFFI CAREFIN Working Papers 22181, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    5. Tufail, Saira & Alvi, Shahzad & Hoang, Viet-Ngu & Wilson, Clevo, 2024. "The effects of conventional and unconventional monetary policies of the US, EU, and China on global green investment," Energy Economics, Elsevier, vol. 134(C).
    6. Donato Masciandaro & Romano Vincenzo Tarsia, 2021. "Society, Politicians, Climate Change and Central Banks: An Index of Green Activism," BAFFI CAREFIN Working Papers 21167, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    7. Setzer, Joana & Higham, Catherine & Jackson, Andrew & Solana, Javier, 2021. "Climate change litigation and central banks," Legal Working Paper Series 21, European Central Bank.
    8. Mertzanis, Charilaos, 2024. "Central bank policies and green bond issuance on a global scale," Energy Economics, Elsevier, vol. 133(C).

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    More about this item

    Keywords

    green bonds; bond yields; monetary policy; corporate sector purchase programme (CSPP); pandemic emergency purchase programme (PEPP);
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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