Determinants of the valu of green bonds in the United Kingdom

Abstract

This dissertation investigates the determinants influencing the market value of green bonds in the United Kingdom, focusing on a range of factors including credit ratings, environmental impact scores, regulatory frameworks, market conditions, and liquidity. The research employs quantitative methodologies to analyze data collected from various financial databases and green bond reports, offering a comprehensive examination of the unique dynamics that affect green bond pricing within the UK’s robust financial market.
The study identifies significant relationships between the market value of green bonds and their associated credit ratings, the perceived environmental benefits of funded projects, as well as the extent of regulatory support. Additionally, it explores how broader economic conditions, and the liquidity of green bonds impact their yield spreads compared to conventional bonds. The findings suggest that while credit ratings and regulatory support are critical, the environmental impact scores significantly enhance the appeal and market value of green bonds, aligning financial gains with sustainable investment outcomes.
This dissertation contributes to the existing literature by providing empirical evidence on the nuanced factors that influence green bond values, addressing a significant gap in sustainable finance research. The insights gained from this study are intended to assist investors, policymakers, and financial institutions in optimizing green bond frameworks to better meet environmental targets and investor expectations in the UK and potentially, on a global scale.