“Green Bonds vs. Traditional Bonds: A Comparative Analysis of Bond Pricing and Macroeconomic Influences in the EU Bond Market.”

Abstract

The relationship between traditional and green bonds has gained more attention in recent years. Nowadays sustainability becomes part of financial markets and green bonds seem to be used more often as an option to regular bonds. Both bond types raise money through debt, however they may have different prices and attract different investors. The theoretical foundation of this study is The Efficient Market Hypothesis (EMH) to check if features such as green bond labels and ESG scores affect how both bond types are priced. The research investigates the price differences between green and regular bonds in 15 countries of the European Union. It uses data from 2020 to 2025 and statistical methods such as correlation and multiple linear regression to study how sustainability and macroeconomic factors affect bond coupon rates. The results show that green bonds do not always have lower coupon rates than regular ones. However, bonds with higher credit ratings usually offer lower rates. ESG scores are weakly linked to lower costs in green bonds, which suggests that sustainability may slightly affect Pricing