New scientific working paper (pdf)
Since the first green bond was issued in 2007, the market has expanded significantly and now accounts for around 3% of the global bond universe. We study the liquidity of green bonds. In particular, we are the first to investigate green bonds’ daily trading volumes and frequency with a unique dataset from
Euroclear. Studying these dimensions of liquidity is particularly important in relatively small markets. Our dataset, covering the period 2020 to 2025, allows us to directly compare green bonds with conventional bonds. We find that green bonds do not suffer from a systematic liquidity disadvantage relative to conventional bonds. On the contrary, they are traded in higher aggregate volumes, driven by more frequent trading rather than by larger transaction sizes. These differences persist during periods of heightened market-wide stress. Within the green bond universe, third-party certification is associated with higher trading volumes through more intensive trading when bonds are active, while green bonds funding more common project types are traded more regularly than bonds financing more niche projects.
