| Author: | Wang, Congwei |
| Title: | Unleashing fintech’s potential : a catalyst for green bonds issuance |
| Advisors: | Jin, Jimmy (AF) |
| Degree: | D.B.A. |
| Year: | 2024 |
| Subject: | Bonds -- Environmental aspects Bonds Fintech Financial services industry -- Technological innovations Bond market -- China Hong Kong Polytechnic University -- Dissertations |
| Department: | Faculty of Business |
| Pages: | xii, 122 pages : color illustrations |
| Language: | English |
| Abstract: | Financial technology, colloquially known as Fintech, has become a cornerstone of modern finance, reshaping the way we interact with financial services and instruments. Its rapid evolution and integration into various sectors have not only streamlined traditional banking and investment processes but have also paved the way for innovative financial solutions that align with global sustainability goals. One such innovation in the realm of sustainable finance is the emergence of green bonds. These bonds, distinguished from traditional financial instruments by their commitment to financing projects with environmental benefits, have gained popularity as a tool for promoting sustainable development. However, despite their potential, the green bond market faces numerous challenges, particularly in issuance processes. This study aims to explore how Fintech could be a catalyst for overcoming these challenges, thereby facilitating the growth of the green bond market. Green bonds represent a novel category within the fixed-income universe, designed specifically to fund projects that have positive environmental impacts, such as renewable energy, energy efficiency, sustainable water management, and clean transportation. Unlike conventional bonds, the proceeds from green bonds are earmarked for green projects, offering investors the opportunity to contribute to environmental sustainability. Despite their benefits and growing investor interest, the issuance of green bonds is fraught with challenges, including high issuance costs, lack of standardization, limited investor awareness, and concerns over 'greenwashing'—where the environmental benefits of a project are overstated. Fintech, with its innovative platforms and cutting-edge technologies, presents a promising solution to these challenges. By leveraging blockchain technology, for example, Fintech can enhance transparency and traceability in the use of proceeds, addressing concerns of greenwashing and thereby boosting investor confidence. Similarly, digital platforms can reduce issuance costs and streamline the bond issuance process, making it easier and more attractive for issuers. Despite these potential benefits, there is currently a lack of consensus on the impact of Fintech on the green bonds market, a gap this study seeks to fill. To empirically investigate the effect of Fintech on green bond issuance, this study utilizes data from the China city-level Fintech index and green bond issuance records between 2016 and 2020. By analyzing the relationship between Fintech development and green bond issuance, this study aims to provide concrete evidence of Fintech's role in facilitating green finance. To address concerns regarding omitted variables that could skew the results, an instrumental variable (IV) approach is employed, using the geographical distance from Hangzhou—a city known for its Fintech innovation—as a proxy for Fintech development. Furthermore, to mitigate endogeneity issues, a staggered difference-in-difference model is utilized, taking advantage of the series of Fintech-facilitating policies as an exogenous shock to the system. This study examines the impact of Fintech on green bonds from both the supply and demand sides. On the supply side, Fintech can empower financial institutions by providing them with tools and platforms to efficiently manage and promote green bond issuance. This includes the use of blockchain for better transparency and smart contracts for automated compliance with green standards. On the demand side, Fintech platforms can play a pivotal role in enhancing social and environmental awareness among investors, thereby increasing demand for green bonds. Through mobile apps, social media, and other digital platforms, investors can easily access information on green projects and their impact, fostering a community of environmentally conscious investors. The study further delves into the nuances of the green bond market through cross-section partition tests. These tests examine the impact of Fintech on green bonds across different dimensions, including the credit ratings of the bonds, the purposes of the proceeds (e.g., renewable energy vs. pollution control), ownership structures (public vs. private issuers), and geographical factors such as the presence of High-Speed Railways (HSR) networks and city locations. These analyses aim to uncover whether the effect of Fintech on green bond issuance varies across different market segments and conditions. By connecting Fintech development with the issuance of green bonds, this study contributes significantly to the literature on sustainable finance and Fintech. Previous research has largely focused on the broader impact of Fintech on sustainability-oriented ventures, without specifically addressing its role in the green bond market. This study fills this gap by providing empirical evidence of how Fintech can support the growth of green bonds, a critical instrument for financing environmental projects. The findings of this study are particularly relevant for policymakers and financial institutions seeking to leverage Fintech innovations to achieve environmental goals. By understanding the mechanisms through which Fintech can influence the green bond market, stakeholders can develop targeted strategies to overcome existing challenges and promote the issuance of green bonds. In sum as the world grapples with the urgent need for sustainable development, green bonds stand out as a key financial instrument for funding environmental projects. However, the challenges associated with their issuance necessitate innovative solutions, which Fintech is well-positioned to provide. Through this study's comprehensive analysis of the relationship between Fintech development and green bond issuance in China, valuable insights are offered into how Fintech can be harnessed to support the growth of the green bond market. By addressing both the supply and demand sides of the equation, and considering various market segments, this research not only contributes to academic discussions but also provides practical guidance for leveraging Fintech in the pursuit of sustainable finance. |
| Rights: | All rights reserved |
| Access: | restricted access |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| 7916.pdf | For All Users (off-campus access for PolyU Staff & Students only) | 2.22 MB | Adobe PDF | View/Open |
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