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      Financing the Response to Climate Change: The Pricing and Ownership of US Green Bonds
      03 Jan 2019Working Paper Summaries

      Financing the Response to Climate Change: The Pricing and Ownership of US Green Bonds

      by Malcolm Baker, Daniel Bergstresser, George Serafeim, and Jeffrey Wurgler
      Green bonds are used for environmentally friendly purposes like renewable energy. Complementing previous research, this paper explores the US corporate and municipal green bond and shows that a subset of investors is willing to give up some return to hold green bonds.
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      Author Abstract

      We study green bonds, which are bonds whose proceeds are used for environmentally sensitive purposes. After an overview of the US corporate and municipal green bonds markets, we study pricing and ownership patterns usingx a simple framework that incorporates assets with nonpecuniary utility. As predicted, we find that green municipal bonds are issued at a premium to otherwise similar ordinary bonds. We also confirm that green bonds, particularly small or essentially riskless ones, are more closely held than ordinary bonds. These pricing and ownership effects are strongest for bonds that are externally certified as green.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: October 2018
      • HBS Working Paper Number: NBER Working Paper Series, No. 25194
      • Faculty Unit(s): Finance; Accounting and Management
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      Malcolm P. Baker
      Malcolm P. Baker
      Robert G. Kirby Professor of Business Administration
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      George Serafeim
      George Serafeim
      Charles M. Williams Professor of Business Administration
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