Rethinking greenium: a quadratic function of yield spread

Chih-Yueh Huang*, David Dekker, Dimitris Christopoulos

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)
50 Downloads (Pure)


A greenium is the yield discount of a green bond compared to a similar non-green bond. Here we challenge implicit assumptions of a conventional estimator of greenium, which takes the difference between yield spreads of green and non-green bonds. We propose that the greenium should be estimated as a function of non-green bond yield spread. We find that the greenium increases for higher levels of non-green bond yield spread and that this occurs at an increasing rate. Further analysis indicates that at least partially this non-linearity accounts for the effects of credit spread and coupon rate differences.

Original languageEnglish
Article number103710
JournalFinance Research Letters
Early online date17 Feb 2023
Publication statusPublished - Jun 2023


  • Green bond premium
  • Green finance
  • Greenium
  • Non-linear
  • Primary market

ASJC Scopus subject areas

  • Finance


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