Title: Green Bond Issuance and Air Quality Improvement: Chinese and International Evidence

Authors: Tse-Chun Lin (The University of Hong Kong, National Taiwan University), Yan Luo (Fudan University), Shu Tian (Asian Development Bank), Hao Yang (The Chinese University of Hong Kong)

Abstract: In this study, we present direct city-level evidence that green bond issuance helps improve local air quality, particularly when the bonds are specifically targeted at air improvement, certified by third parties, or issued by listed and non-state-owned firms. Further analysis reveals a transboundary effect: active green bond issuance in one city also improves the air quality of the issuing city’s downwind adjacent cities under favorable wind conditions for atmospheric transport. Additionally, we provide international evidence using data from 28 countries/regions: green bond issuance enhances air quality in both the issuing city and its adjacent cities, with the transboundary effect decreasing monotonically with the inter-city distance.