Are retail investors willing to buy green bonds? A case for Japan

ABSTRACT

With the growing importance of the financial sector in mitigating environmental pressure, many financial institutions have begun issuing green bonds. This study investigated retail investors’ willingness to pay for green bonds using the double-bounded dichotomous choice contingent valuation method. The findings from the survey performed on Japanese respondents reveal that, on average, respondents are willing to invest in green bonds when offered an annual interest rate of around 1.1%. The results also indicate that respondents with higher altruism and environmental awareness levels, information about green bonds, and frequent investors have a higher preference for investing in green bonds. The results suggest financial institutions’ importance in providing information on how green bonds can help reduce environmental pressure and raise investors’ awareness of green bonds.

KEYWORDS:

• Green bonds
• CVM
• WTP
• altruism
• environmental awareness

JEL CLASSIFICATION:

• D64
• G11
• Q42
• Q51

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1 The survey was distributed to citizens of Kanto (Tokyo, Kanagawa, Saitama, and Chiba), Chukyo (Aichi, Mie, and Gifu), and Kansai (Osaka, Hyogo, Kyoto, Nara, Shiga, and Wakayama) areas.

2 Pearson’s r between the local and global environment variables was 0.74.

3 Among the respondents that had heard of GB, 31% had an income above JPY 8 million, while only 17% had not heard of GB within the high-income respondents .

Additional information

Funding

This work was supported by Japan Society for the Promotion of Science [grant number JP22H03808].