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Reduced Profitability of Green Bond Issuance: Evidence from China

Author

Listed:
  • Yilin Cai
  • Meng Feng
  • Yueming (Lucy) Qiu
  • Yi David Wang

Abstract

This paper uses a multi-time period difference-in-differences model to evaluate the effect of green bond issuance on the profitability of heavy-polluting enterprises listed on China's A-share market. Results reveal that the average treatment effect of green bond issuance on heavy-polluting firms’ ROE is significantly negative. Therefore, it suggests that green bond issuance requires issuing firms to give up a large amount of their profitability to develop green project and achieve green transformation. Heterogeneity analyses demonstrate that such issuance has a negative effect on firms’ profitability, which varies across different ownership, regions, and industries. Overall, these results are consistent with the concept that green bond issuance binds heavy-polluting companies to be more mindful of their polluting activities.

Suggested Citation

  • Yilin Cai & Meng Feng & Yueming (Lucy) Qiu & Yi David Wang, 2026. "Reduced Profitability of Green Bond Issuance: Evidence from China," IMF Working Papers 2026/082, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2026/082
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