Policy support in promoting green bonds in Asia: empirical evidence

Many economies, especially in Asia, implement different policies to incentivize the issuance of corporate green bonds. However, there is a lack of empirical evidence on the effectiveness of green bond policies. This study examines the impact of a broad range of green bond policies on the issuance of corporate green bonds in 56 green-bond-issuing economies, including 11 economies in Asia, from January 2010 to June 2020. Using the difference-in-difference specification within the multilevel probit model, the study shows that the following policies increase the probability of issuance of green bonds by corporates: (i) policies that reduce the cost of green bond issuance, such as green bond grants and tax incentives (such policies are particularly popular in Asia); (ii) coordination policies such as the establishment of green bond or green finance institutions, committees, groups, as well as other policy signals such as national commitments and targets; and (iii) global international cooperation and international standardization.Key policy insights Policies that reduce the cost of green bond issuance, such as green bond grants and tax incentives, incentivize the issuance of corporate green bonds.Coordination policies, such as the establishment of green bond or green finance institutions, committees, groups, as well as other policy signals, such as national commitments and targets, incentivize the issuance of corporate green bonds.Global international cooperation and standardization incentivize corporate green bond issuance.