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Oil Price Shocks and Green Bonds: A Longitudinal Multilevel Model

Author

Listed:
  • Azhgaliyeva, Dina

    (Asian Development Bank Institute)

  • Mishra, Ranjeeta

    (Asian Development Bank Institute)

  • Kapsalyamova, Zhanna

    (Asian Development Bank Institute)

Abstract

We investigate the impacts of crude oil price shocks on financial markets by examining the effect of oil price shocks on green bond issuance. Green bond issuance has been growing fast over the past several years; despite this, the share of green bonds in the total bonds remains small. Using the multilevel longitudinal random intercept and random coefficient models, we investigate the effect of disentangled crude oil price shocks on green bond issuance in the private sector. Unlike the general bond market, our empirical analysis finds that oil supply shocks affect green bond issuance positively. We also find that the public issuance of sovereign green bonds tends to promote the private issuance of green bonds. Our results are robust and hold when using alternative models; they also survive a range of robustness tests.

Suggested Citation

  • Azhgaliyeva, Dina & Mishra, Ranjeeta & Kapsalyamova, Zhanna, 2021. "Oil Price Shocks and Green Bonds: A Longitudinal Multilevel Model," ADBI Working Papers 1278, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:1278
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    More about this item

    Keywords

    green bonds; sovereign bonds; green finance; oil shock; policy support; crude oil price;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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