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Bulletin of Monetary Economics and Banking

Document Type

Call for Paper

Abstract

This study analyzes the impact of climate risk, cost of capital, and macroeconomic variables on the Indonesian bond market, focusing on non-ESG aware and ESG-aware bonds. Using a regression analysis, we found that the cost of capital has a significant negative effect on bond yields, highlighting the importance of policymakers focusing on initiatives that can lower the cost of capital for investors. Inflation rate was also found to have a significant positive effect on non-ESG aware bonds, which is a unique feature of the Indonesian bond market. We found that ESG-aware bond yields were negatively significant, indicating that investors are increasingly considering environmental and social values when making investment decisions. Additionally, macroeconomic variables did not show a significant impact on ESG-aware bonds. Our study provides valuable insights for policymakers and investors on how to navigate the Indonesian bond market and implement strategies that align with environmental and social values

Cost of Capital and Climate Risk in the Indonesian Bonds Market_revised.pdf (544 kB)
Cost of Capital and Climate Risk in the Indonesian Bonds Market_revised.pdf

First Page

75

Last Page

94

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

France

Affiliation

NEOMA Business School

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