Is There a Green Bond Premium? The Yield Differential Between Green and Conventional Bonds

ArXiv ID: ssrn-2889690 “View on arXiv”

Authors: Unknown

Abstract

In this paper, we examine the yield premium of green bonds. We use a matching method, followed by a two-step regression procedure, to estimate the yield differe

Keywords: Green bonds, Yield premium, Sustainability, Fixed income, Matching method

Complexity vs Empirical Score

• Math Complexity: 5.5/10
• Empirical Rigor: 7.0/10
• Quadrant: Street Traders
• Why: The paper employs standard econometric methods (matching, two-step regression) with moderate mathematical density, but its empirical component is strong, using a defined bond dataset (Bloomberg), specific timeframes, and detailed regression analysis with statistical significance.

  flowchart TD
    A["Research Question: Is there a yield premium for green bonds?"] --> B["Data Collection"]
    B --> C{"Methodology"}
    C --> D["Step 1: Matching Method<br>Construct synthetic control group"]
    C --> E["Step 2: Two-Step Regression<br>Estimate yield determinants"]
    D --> F["Matched Dataset"]
    E --> F
    F --> G["Computational Analysis<br>Regress yield difference on green indicator"]
    G --> H["Key Findings"]
    H --> I["Outcome: Green Bond Premium<br>Quantified yield differential vs. conventional bonds"]