Are investors rational profit maximisers or do they exhibit a green preference. Evidence from the green bond market

Abstract

stockholm school of economics department of economics master’s thesis in economics academic year 2014-2015 are investors rational profit maximisers or do they exhibit a green preference? – evidence from the green bond market emmi östlund (21875) abstract green bonds are a new debt investment product that has been developed to stimulate green investments. using a data set of 28 matching pairs of bonds, the spread differentials between green and conventional bonds of the same issuer was explored in order to find out whether investors exhibit a green preference. the results showed no evidence for the existence of a green preference among investors and indicated instead that green bonds were traded at a discount compared to their conventional counterparts. the results indicate that green bonds are unlikely to be a large catalyst for higher green investment rates as long as there are no targeted policies that accompany them. keywords: green preference, investing, bonds, utility, climate change jel: g11, g12, h23 supervisor: chloe le coq date submitted: may 14, 2015 date examined: may 25, 2015 discussant: examiner: gryte verbusaityte maria perrotta berlin acknowledgements first, i would like thank my tutor chloe le coq for the patience and extremely valuable feedback that i have got throughout the thesis writing process. furthermore, i would like to thank swedbank dcm for providing me with the data and for teaching me everything i know about bonds. i would also like to thank …

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