A Decade of Green Bond Markets in Emerging Economies

Green finance has been one of the trending keywords in Google trends in the recent years. Though it is not a buzzword for developed economies per se, it is for emerging markets. The goal of green finance is to provide funding for sustainable development projects. Green bonds (GB) are one of the green finance instruments and are issued to fixed-income seeking investors, and the funds collected through these are invested in green projects. Traditionally, firms in emerging economies (EE) have remained skewed towards bank loans as debt in the capital structure. It is important to highlight here that bank loans as debt were not always by their choice but by compulsion, also because other avenues of debt like bond markets in EEs are not well developed and are thinly traded. It is well known that bond markets are a better source of debt funding than other debt sources from the cost of funding and loan-concentration risk perspectives