SUERF Workshop on Green Finance at the Institute for Finance, Banking, and Insurance

On January 24, this year’s SUERF workshop took place at the Department of Finance, Accounting, and Statistics. SUERF, the Société Universitaire Européenne de Recherches Financières, is a non-profit association, with the aim to promote scientific communication between practitioners, such as central bankers or financial industry representatives, and academics in the field of financial research. In Cooperation with the UniCredit Foundation, department member Josef Zechner hosted the workshop at the Institute for Finance, Banking, and Insurance.

As part of the Workshop, the 6th SUERF/UniCredit Foundation research prize was awarded to two outstanding papers submitted to a call for papers on this year’s topic of “Green Finance”. The committee unanimously decided to award the prize to Dejan Glavas, from ESCP Europe, for his paper “How Do Equity Investors React to Green Bond Issuance Announcement?” and to Olivier David Zerbib, from Tilburg University, for his paper “The effect of pro-environmental preferences on bond prices: Evidence from green bonds”.

Both winners held convincing presentations, followed up by lively discussions among the numerous workshop participants.

Dejan Glavas shows that, for an issuer, there is a positive and significant abnormal return on equity, the day it announces the issuance of a green bond, compared to the announcement of issuance of a conventional bond. The results hold after controlling for firm and issuance characteristics, implying that the Paris Agreement to combat climate change does have an impact on equity investors’ perception of new, and sustainable, financial products.

Olivier David Zerbib analyzes the effect of non-pecuniary motives, specifically pro-environmental preferences, on bond market prices. His results suggest that investors’ pro environmental preferences have a low impact on bond prices but induce a negative yield premium of 2 basis points on average. This premium is more pronounced for financial and low-rated bonds, but, as emphasized in the paper, this low impact does not represent a disincentive for investors to support the expansion of the green bond market.

Annalisa Aleati, Scientific Director of the UniCredit Foundation, and Ernest Gnan, SUERF Secretary General, already announced their interest to hold next year’s SUERF workshop at the Institute for Finance, Banking, and Insurance.

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