Do bond attributes affect green bond yield? Evidence from Indian green bonds

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Over the years, green finance tools have gained considerable attention with the increased concern to achieve sustainability in the economy. Green bonds are one such new innovative green finance tool embodied with bonds and green attributes. However, research on the Indian green bond is relatively modest. Thus, this study aims to analyze the impact of bond attributes on green bond yield. The study retrieves green bond data from the Bloomberg and Climate Bonds Initiative databases from 2015 to 2022. To test the framed hypotheses, the study employs a panel regression technique with a random effect model. The findings of the study show a significant positive effect of bond ratings (β = 2.80926, p < 0.05) on green bond yield based on the argument that good-rated bonds serve as collateral in the security market. On the contrary, the result also reveals a significant negative effect of bond maturity (β = –0.327296, p < 0.05) and bond label (β = –3.16480, p < 0.05) on green bond yield. The results based on the observation suggest that when the certified bond is issued, this signals the greenness of the bond in the market and attracts high demand, whereas the long maturity ensures the green project construction for a longer period, resulting in a lower bond value. Thus, empirical findings reveal that bond attributes are the major factors in influencing bond yield. The obtained results serve as a prerequisite for potential issuers, investors, and policymakers to further popularize the green bond in the country.

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    • Table 1. Variable descriptions
    • Table 2. Variance inflation factor
    • Table 3. Summary statistics
    • Table 4. Regression results showing the impact of bond attributes on green bond yield
    • Conceptualization
      Abhilash Abhilash, Sandeep S. Shenoy, Dasharathraj K. Shetty
    • Data curation
      Abhilash Abhilash, Dasharathraj K. Shetty
    • Formal Analysis
      Abhilash Abhilash, Sandeep S. Shenoy, Dasharathraj K. Shetty
    • Funding acquisition
      Abhilash Abhilash, Sandeep S. Shenoy
    • Investigation
      Abhilash Abhilash, Sandeep S. Shenoy, Dasharathraj K. Shetty
    • Methodology
      Abhilash Abhilash, Sandeep S. Shenoy, Dasharathraj K. Shetty
    • Resources
      Abhilash Abhilash, Sandeep S. Shenoy, Dasharathraj K. Shetty, Aditi N. Kamath
    • Software
      Abhilash Abhilash
    • Writing – original draft
      Abhilash Abhilash, Sandeep S. Shenoy, Dasharathraj K. Shetty
    • Writing – review & editing
      Abhilash Abhilash, Sandeep S. Shenoy, Dasharathraj K. Shetty, Aditi N. Kamath
    • Project administration
      Sandeep S. Shenoy, Dasharathraj K. Shetty
    • Supervision
      Sandeep S. Shenoy, Dasharathraj K. Shetty
    • Validation
      Sandeep S. Shenoy, Dasharathraj K. Shetty, Aditi N. Kamath
    • Visualization
      Sandeep S. Shenoy, Dasharathraj K. Shetty, Aditi N. Kamath