From Green Signals to Financial Gains: The Impact of Green Bond Issuance on Corporate Profitability in China

Abstract

This thesis analyses whether issuing green bonds improves the financial performance of firms in China. Conducting a dynamic Difference-in-Differences approach on panel data from 2010 to 2024, the analysis compares green bond issuers with conventional bond issuers and non-issuers, applying nearest-neighbour matching and robust controls. Contrary to the expectations, findings indicate a significant short-term drop in financial performance after issuance, indicating also no clear improvement in the long run. Sector-level results indicate strong heterogeneity among industries, suggesting that while some sector may eventually benefit, others remain facing financial drawbacks. The evidence shows that Chinese green bonds are not directly associated with financial gains, raising questions about their effectiveness as profit enhancing instruments in developing markets. This thesis contributes to the debate on green finance effectiveness by providing robust empirical evidence from a major emerging economy.