Greenness ratings and green bond liquidity

Abstract

Using a global panel dataset of 3,496 green bonds and conducting regressions, we find a positive relationship between greenness ratings from second-party opinions (SPOs) and green bond liquidity. Green bonds from corporate and municipal issuers with a greenness rating show higher liquidity than green bonds without a greenness rating. For financial institutions and other public issuers besides municipalities, we find no effect of greenness ratings on green bond liquidity.