The Influence of Institutional Factors on Green Bond Issuance: a Look Back to 2021

Abstract

ESG factors are becoming an integral part of financial relationships, thereby increasing the demand for responsible financing instruments. Thanks to the latter, an investor can not only get the expected rate of return, but also contribute to the achievement of sustainable development goals. Green bonds, which are an example of such an instrument, help to raise financing for green activities and projects. By the end of 2021, the total amount of issued green bonds exceeded the record $1.5 trillion mark. The crisis year of 2022 contributed to a revision of many ESG criteria and the relevance of green agenda as a whole. Such changes can have serious consequences for the green bond market, but their analysis is a matter for the future. The main purpose of the research is to analyze the determinants that have influenced green bond issuance in European countries in 2021. The authors find a significant relationship between institutional factors and the volume of issued green bonds using correlation and regression analysis on a sample of European countries. Among institutional factors, the most significant are environmental regulation and the level of sustainability development.

Keywords

• esg factors (principles)
• determinants of bond issuance
• regulatory mechanisms
• sustainable development