What drives corporate green bond issuance in Europe? The role of institutions, environmental policy, and financial contexts

Unofficial AI-generated summary based on the public title and abstract. Not an official translation.

🔬研究者:Provides a nuanced understanding of how policy design and institutional quality interact to drive green bond issuance, offering a framework for future cross-country studies.

🏢実務担当者:Highlights that corporate green bond issuance benefits from clear, stringent regulations and accessible financial markets; companies should monitor regulatory coherence.

🏛政策担当者:Emphasizes that policy coherence and institutional strength matter more than the number of policies; recommends focusing on enforcement and clarity to avoid deterring issuance.

This paper investigates the structural drivers of corporate green bond issuance across 19 European countries from 2013 to 2024. Using a structural equation modeling framework, it analyzes how institutional governance, climate policy design, and financial market characteristics interact to influence green bond outcomes. By distinguishing between policy stringency and policy proliferation, the study clarifies how regulatory coherence, rather than policy volume alone, affects issuance. The paper highlights the enabling role of governance and the conditional impact of financial development, offering insights for policymakers seeking to align climate finance instruments with effective institutional and regulatory frameworks. The study employs a covariance-based structural equation modeling (CB-SEM) approach to jointly estimate the relationships between institutional governance, climate policy design, financial market structure, and corporate green bond issuance. The model includes three latent constructs—Institutional Governance, Policy Stringency, and Policy Effort—derived from validated indicators using confirmatory factor analysis. Bond-level issuance data are merged with macroeconomic, institutional, and policy variables for 19 European countries from 2013 to 2024. The model captures both direct and indirect effects, allowing for interaction terms to test institutional–policy complementarity. Robustness checks include time-specific controls, macroeconomic variables, and alternative inference with clustered standard errors. The results show that policy stringency significantly increases corporate green bond issuance, while a higher number of policies have a negative effect, suggesting that policy proliferation may weaken regulatory clarity. Institutional governance does not directly affect issuance but operates as a key enabler by supporting the adoption of stringent and coherent policies. Financial market access promotes issuance by lowering participation barriers, whereas financial market depth lacks a consistently positive impact. Overall, the findings highlight that credible institutions, coherent regulation, and aligned financial systems are essential to translating climate policy commitments into effective and scalable green bond market activity. The analysis is limited to corporate green bond issuance in 19 European countries from 2013 to 2024, and findings may not generalize to sovereign or emerging market contexts. The use of structural equation modeling requires cross-sectional assumptions that restrict causal interpretation. Data availability also constrains the inclusion of firm-level strategic behavior and sector-specific policy mechanisms. Despite these limitations, the study offers important policy implications: scaling green bond markets requires more than regulatory ambition—it depends on institutional credibility, regulatory coherence, and financial access. Future research could expand the framework to other regions, instruments, and multi-level governance contexts. The findings highlight the importance of regulatory coherence, institutional quality, and financial accessibility in scaling corporate green bond markets. Policymakers should prioritize the enforcement and clarity of climate regulations over the proliferation of fragmented policies. Strengthening institutional governance enhances the credibility and impact of green policy frameworks, while improving financial market access lowers barriers for corporate issuers. EU-level initiatives such as the Green Bond Standard and Taxonomy Regulation must be complemented by consistent national implementation. Practitioners and regulators can use these insights to design more effective green finance strategies that align environmental goals with market-based instruments. This study contributes three novel insights. First, it disentangles climate policy effects by distinguishing policy stringency from policy proliferation, showing that only stringent, well-enforced policies stimulate issuance, while excessive, poorly coordinated measures can deter market activity. Second, it reconceptualizes financial development as a conditional driver, finding that financial depth supports green finance only when aligned with robust governance and regulation. Third, it identifies institutional governance as an upstream force that shapes policy design and credibility. Together, these insights explain divergent issuance patterns across countries and challenge common assumptions in the green bond and sustainable finance literature.

• semanticscholar https://doi.org/10.1108/cfri-01-2025-0029first seen 2026-05-30 05:25:36 · last seen 2026-06-02 05:22:55