Do green bond issuers suffer from financial constraints?

ABSTRACT

We find that green bond issuers are more financially constrained. We use three measures of financial constraint, which are the FCP index, the SA index, and the Altman’s Z score. We test the link between green bond issuance and financial constraints using difference in means, regression analyses and a matching procedure. We finally document that these constraints increase after the first green bond issuance.

KEYWORDS:

• Green finance
• green bonds
• sustainable finance
• climate finance
• financial constraints

JEL CLASSIFICATION:

• Q56
• G15
• G30
• G00
• G32

Disclosure statement

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

Notes

¹ Firms with higher FCP and SA indices are more constrained. Firms with lower Z score are considered to have a higher bankruptcy risk.