Green Fund Allocation and Risk Premium:Evidence from China's Green Bond Market
Green bonds play a vital role in the green financial system,which represent a signifi-cant form advancing the achievement of"dual carbon"goals and the high-quality development of fi-nance.This paper explores the relationship between green fund allocation and bond risk premiums,as well as the underlying mechanisms.The results indicate that increasing green fund allocation sig-nificantly reduces bond risk premiums,with the regulatory role of competent authorities contributing to enhance creditworthiness.Mechanism analysis reveals that heightened green fund allocation en-hances the"green credibility"of bonds,manifested in higher third-party ratings and greater environ-mental benefits.Bonds with higher green fund allocations exhibit lower incentives for"misrepor-ting",preferring authoritative green certifications and demonstrating superior environmental informa-tion disclosure.We also find that competent authority labeling,stringent regulation,and green certi-fication amplify the influence of green fund allocation on risk premiums.Generally,the government should optimize the structure of green fund allocation,enhance the transparency of green fund utili-zation,and improve third-party assessment and certification for green bonds.
green bondsgreen fund allocationrisk premiumgreen investmentgreenwashing
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