Can green bond improve the investment efficiency of renewable energy?

There has been a growing focus on the role played by green financing in propelling the high-quality advancement of the green economy in the contemporary period. This study examines the connection between green bond (GB) and the investment efficiency of renewable energy (REIE) by utilizing bootstrap rolling-window subsample Granger causality tests on data spanning from March 2016 to April 2023 in China. The findings reveal a dual effect of GB on REIE. On one hand, GB promotes REIE. This observation aligns with the "promoting effect," which postulates that GB facilitates additional funding for the technological innovation of renewable energy, thus enhancing investment efficiency. On the other hand, GB has an adverse impact on REIE. This outcome validates the "inhibition effect," suggesting that GB impedes REIE due to inadequate project selection and operation. Correspondingly, REIE negatively affects GB as companies with higher investment efficiency find it easier to secure lower-cost funds through alternative financing avenues. This study presents significant implications for policymakers aiming to augment REIE and attain sustainable development through the advancement of GB.