For the love of the environment: An analysis of Green versus Brown bonds during the COVID-19 pandemic

Hacıömeroğlu H., DANIŞOĞLU S., GÜNER Z. N.

Finance Research Letters, vol.47, 2022 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 47
  • Publication Date: 2022
  • Doi Number: 10.1016/
  • Journal Name: Finance Research Letters
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, ABI/INFORM
  • Keywords: Green bonds, Greenium, COVID-19 pandemic, Diff-in-diff
  • Middle East Technical University Affiliated: Yes


© 2021 Elsevier Inc.Increased awareness among investors about environmental and social issues made green bonds a popular investment alternative over the last decade. This study analyzes whether the primary and secondary market return performance of green bonds is affected from the market conditions induced by the pandemic. Results presented in this study show that while both green and comparable conventional (brown) bonds issued by corporations experienced a decline in their primary market yields following the start of the pandemic, the decline for the green bonds was somewhat larger, resulting in green bond yields that are 32 basis points lower on average. Secondary market results of the study confirm the stronger demand for green bonds in this market as well and show that while both green and brown bonds experience a decline in their secondary market returns during the pandemic, the decrease in brown bond returns is 45 basis points larger compared to green bonds. Findings also suggest that failure to consider issuer types may lead to biased results when green bonds are compared against their conventional alternatives.