Comparing factors affecting Chinese institutional investors' willingness to pay for green bonds in Beijing, Shanghai, and Shenzhen

Previous studies on green bonds (GBs) in China have not extensively analyzed how investor characteristics such as demographic background and environmental concerns affect Chinese investors' decisions to invest in GBs. Therefore, these aspects should be examined to understand the GB market and its potential expansion. To address this gap, this study analyzed how Chinese institutional investors' social attributes, environmental concerns, and residential locations affect their decisions to purchase GBs. The ordered-probit model estimation revealed that experience in investing in GBs and high environmental awareness lowers the yield required for institutional investors to invest in GBs, suggesting that these factors increase investors' willingness to pay (WTP) for GBs. The study also finds that investors in Shanghai have a higher WTP for GBs than those in Beijing and Shenzhen. The results provide important insights for the government and financial authorities to implement measures aimed at increasing institutional investors' interest in the environment. Additionally, these results can drive GB issuers to promote sales to institutional investors with an environmental focus.