The choice of green bond financing instruments

Figures & data

Table 1. The comparison of different green bond systems

	Enterprise bonds	Corporate bonds	Debt financing instruments
Authority	NDRC	CSRC	PBOC NAFMII
Issuance system	Endorsement system	Approval system	Registration system
Green bond policy	“Green Bond Issuance Guidelines”	“Guidance on Supporting the Development of Green Bonds”	“Business Guidelines for Green Debt Financing Instruments for Non-financial Enterprises”
Application procedure	Based on complete procedures and debt repayment safeguard measures, green bonds adopt “speeding up and simplifying audit” bond audit procedures.	The acceptance and auditing of green corporate bond adopt “Special auditing” and “Immediate auditing of declaration” policy.	For green debt financing instruments, open a green channel for the registration review, strengthen the registration service and unify the identification of acceptance of registration notice.
Purpose of raising funds	Enterprises are allowed to use no more than 50% of raising funds to repay bank loans and supply working capital.	The funds raised by green corporate bonds can be used for the construction, operation, acquisition of green industrial projects, or repayment of bank loans of green industrial projects.	Enterprises should use green debt financing tools to raise funds for the construction, operation and supplement of supporting liquidity of green projects, or repay green loans.
Other policy	Adjust some access conditions of the existing audit policies and relevant provisions for enterprise bonds.	Fulfill the obligation of information disclosure, encourage external certification or assessment, and open special account for fund raising.	Disclose specific information on green projects, establish fund-raising supervision account, and encourage external evaluation opinions

Note: Collate and arrange them according to relevant policy information.

Table 2. The selection of variables

Variable		Name	Symbol	Explanation of meaning
Dependent variable		Whether to choose labeled green bonds	Y	It is “1” when the bonds issued by enterprises are labeled green bonds, and otherwise “0”.
Core explanatory variables	Policy differences	Proportion of project use	Use	It equals the proportion of funds used for project construction to the total amount of issuance.
		Medium-term note	Debt1	It is “1” when the bond is a medium-term note, and otherwise “0”.
		Corporate bond	Debt2	It is “1” when the bond is a corporate bond, and otherwise “0”.
		Enterprise bond	Debt3	It is “1” when the bond is an enterprise bond, and otherwise “0”.
Control variables	Company characteristics	Listed or non-listed company	ENT1	It is “1” when the companies are listed companies, and otherwise “0”.
		Company scale	ENT2	It equals the firm’s logarithm of the total asset in the previous year.
		Debt maturity	ENT3	It equals the firm’s proportion of long-term liabilities to total liabilities in the previous year.
		Profitability power	ENT4	It equals the firm’s rate of return on equity in the previous year
		Growth power	ENT5	It represents the firm’s rate of net asset growth in the previous year
	Bond characteristics	Issuing interest rate	Bond1	It represents the coupon rate at the time of issuance of the bond
		Bond maturity	Bond2	It represents the maturity at the time of issuance of the bond
		Issuance scale	Bond3	It represents the funds raised by the bond

Table 3. Sample distribution

		Labeled green bond	Ordinary bond	Total	Conditional mean of Y
Type of bonds	Medium-term note	28	111	139	0.2014
	Corporate bond	41	79	120	0.3416
	Enterprise bond	35	114	149	0.2348
Listed or non-listed company	Listed	33	79	112	0.2946
	Non-listed	71	225	296	0.2398
Bond maturity	3-year	34	73	107	0.3177
	5-year	42	116	158	0.2658
	7-year	28	115	143	0.1958
	Total	104	204	408	0.2549

Table 4. Descriptive statistics of variables under the classification of Y

Variable	Y	Mean	Minimum	Median	Maximum	Std. Dev.
Use (proportion of project use)	0	0.3921	0.0000	0.3500	1.0000	0.4113
	1	0.6632	0.0000	0.6000	1.0000	0.3183
	All	0.4612	0.0000	0.5000	1.0000	0.4069
ENT2 (company scale)	0	5.7892	3.2493	5.5192	11.0423	1.3550
	1	6.4201	3.4747	5.9852	10.3441	1.5032
	All	5.9500	3.2493	5.7093	11.0423	1.4193
ENT3 (debt maturity)	0	0.5604	0.0466	0.6079	0.9245	0.2282
	1	0.5070	0.0511	0.5367	0.8961	0.2015
	All	0.5469	0.0466	0.5878	0.9245	0.2227
ENT4 (profitability power)	0	0.0562	−0.0942	0.0352	0.3507	0.0598
	1	0.0724	0.0010	0.0547	0.2314	0.0572
	All	0.0603	−0.0942	0.0409	0.3507	0.0595
ENT5 (growth power)	0	0.2096	−0.8332	0.1480	1.7865	0.2497
	1	0.2076	−0.0216	0.1542	1.4387	0.2350
	All	0.2090	−0.8332	0.1491	1.7865	0.2458
Bond1 (issuing interest rate)	0	5.3357	2.9500	5.2000	8.8000	1.3479
	1	5.0813	2.8000	5.0000	7.5000	1.1004
	All	5.2709	2.8000	5.1550	8.8000	1.2928
Bond2 (bond maturity)	0	5.2763	3.0000	5.0000	7.0000	1.5509
	1	4.8846	3.0000	5.0000	7.0000	1.5474
	All	5.1765	3.0000	5.0000	7.0000	1.5575
Bond3 (issuance scale)	0	12.5622	0.5000	10.0000	200.0000	16.4311
	1	12.6077	1.0000	10.0000	50.0000	10.2117
	All	12.5738	0.5000	10.0000	200.0000	15.0793

Table 5. Proportion of project uses of different types of bonds

Type of bond	Mean	Minimum	Quant.0.25	Median	Quant.0.75	Maximum	Std. Dev.	Obs.
Medium-term note	0.3660	0.0000	0.0000	0.0000	1.0000	1.0000	0.4435	139
Corporate bond	0.2617	0.0000	0.0000	0.0000	0.5000	1.0000	0.4038	120
Enterprise bond	0.7107	0.0000	0.6000	0.6333	0.9250	1.0000	0.1932	149
Total	0.4612	0.0000	0.0000	0.5000	0.8565	1.0000	0.4069	408

Table 6. Empirical results of green debt financing instruments selection

		(1)	(2)	(3)	(4)	(5)
Constant term	C	4.1551*** (3.3220)	2.5613* (1.7038)	8.1903*** (4.2378)	3.8330 (1.4633)	3.1243** (2.3084)
Core explanatory variables (policy differences)	Use	3.7821*** (7.6894)	4.0662*** (7.5316)	3.7299*** (7.4969)	3.9567*** (7.2792)	3.8091*** (7.4173)
	Debt3xUse	-12.0240*** (-5.7414)	-11.4033*** (-5.7549)	-12.017*** (-6.2287)	-11.3393*** (-5.7400)	-11.5845*** (-5.8386)
	Debt1	-7.7185*** (-5.7946)	-8.1374*** (-6.1738)	-8.8511*** (-6.4270)	-8.5813*** (-6.0419)	-8.0468*** (-6.1531)
	Debt2	-5.9119*** (-4.6135)	-6.4190*** (-5.0532)	-6.9843*** (-5.3123)	-6.8591*** (-5.0155)	-6.1965*** (-4.9517)
Control variables (company characteristic)	ENT1		0.5226 (1.2651)		0.4011 (0.9366)
	ENT2		0.3501*** (3.0031)		0.4896*** (2.9859)	0.3660*** (3.2639)
	ENT3		-1.4439* (-1.8812)		-1.4531* (-1.8018)	-2.0292*** (-2.8753)
	ENT4		4.5829 (0.1188)		4.6672 (1.5303)
	ENT5		-0.8085 (0.2538)		-0.8556 (-1.1818)
Control variables (bond characteristic)	Bond1			-0.2811** (-2.0229)	-0.1131 (-0.7302)
	Bond2			-0.3331** (-2.5053)	-0.1321 (-0.8933)
	Bond3			-0.0081 (-0.5667)	-0.0387 (-1.6891)
McFadden R^2		0.2865	0.3374	0.3061	0.3478	0.3248
LR-statistic		132.6994***	152.5400***	141.7774***	157.2045***	147.9158***
Akaike info criterion		0.8345	0.7987	0.8270	0.8021	0.7996
Schwarz criterion		0.8837	0.8985	0.9056	0.9318	0.8692

Notes: a. Z-statistics are reported in parentheses; b. *, ** and *** denote statistical significance at 10%, 5% and 1%, respectively.

Table 7. The results of robustness test

		(6)		(7)
		Coefficient	z-Statistic	Coefficient	z-Statistic
Constant term	C	3.1103	1.1801	3.1820**	2.3782
Core explanatory variables (policy differences)	Use	4.2011***	7.2303	3.7911***	7.4201
	Debt3× Use	−11.1001***	−5.4631	−11.6258***	−5.8413
	Debt1	−8.4428***	−5.7743	−8.1011***	−6.1635
	Debt2	−6.7405***	−4.7961	−6.2758***	−4.9775
Control variables (company characteristic)	ENT1	0.5464	1.1593
	ENT2	0.5081***	2.9303	0.3846***	3.4769
	ENT3	−1.5403*	−1.8140	−2.1175***	−2.9676
	ENT4	4.5120	1.3731
	ENT5	−0.1258	−0.3428
Control variables (bond characteristic)	Bond1	−0.1206	−0.7471
	Bond2	−0.0652	−0.4373
	Bond3	−0.0397	−1.6790
McFadden R^2		0.3672		0.3275
LR statistic		153.9838***		148.7817***
Akaike info criterion		0.8027		0.7985
Schwarz criterion		0.9422		0.8684

Note:*, ** and *** denote statistical significance at the 10%, 5% and 1%, respectively.