Navigating Geopolitical Risks: Deciphering the Greenium and Market Dynamics of Green Bonds in China
Round 1
Reviewer 1 Report
Comments and Suggestions for Authors
I would like to compliment the authors on this paper. Nevertheless, they should rephrase some of the writing and avoid the first person. The authors should provide a better text formatting
The authors should better detail the results obtained in the abstract, as well as the implications for both theory and practice.
In the results the hypotheses should be tested and conclude if are rejected or not.
1.What is the main question addressed by the research?
There are 3 research questions:
“Do green bonds have an issuance cost advantage compared to traditional bonds?
Do geopolitical risks increase the prices of green bonds, thereby promoting a green premium? Additionally, does the impact of such exogenous shocks exhibit industry-specific characteristics in the financial sector?”
Then, based on the literature, hypotheses were formulated. However, in the results the hypotheses should be tested and conclude if are rejected or not.
2. What parts do you consider original or relevant for the field? What specific gap in the field does the paper address?
Provide a comprehensive analysis of the impact of geopolitical risks on the pricing of Chinese green bonds;
The use of the latest two-stage panel estimation method allowed more reliable analytical conclusions;
Establish green bond as reliable tools for sustainable investment.
3. What does it add to the subject area compared with other published material?
Some political recommendations.
4. What specific improvements should the authors consider regarding the methodology? What further controls should be considered?
In the methodology should be explained how the models were estimated, and the diagnosis tests applied. There should be a table with all the variables and explaining the type of variable, not only control variables.
The authors should explain what the acronyms of the variables mean. For example gchn is??? Without an explanation, you can't understand the text or the tables.
5. Please describe how the conclusions are or are not consistent with the evidence and arguments presented. Please also indicate if all main questions posed were addressed and by which specific experiments.
The conclusions should be related with the literature review and referred if the study objective was reached.
It should better concretise the answers to the research questions posed, as well as relate them to the aforementioned literature. What corroborates, what adds...
6. Are the references appropriate?
Yes
7. Please include any additional comments on the tables and figures and quality of the data.
The result model tables should be explained better, there are values that were not explained. We do not know the meaning of the values.
Author Response
Subject: Thank You for Your Valuable Feedback on Our Manuscript
Notes: Please see the attachment
Dear Reviewer,
We hope this message finds you well.
We would like to express our sincere gratitude for your thorough review and valuable suggestions on our manuscript. Your insights have significantly contributed to improving the clarity，readability, and precision of our paper.
We have carefully addressed each of your comments and made the necessary revisions. Attached to this email, you will find a detailed response to your review, outlining how we have incorporated your feedback into the revised manuscript.
Thank you once again for your time and effort in reviewing our paper. We deeply appreciate your contributions and look forward to your favorable consideration of our work.
Best regards
Author Response File: 
Author Response.pdf
Reviewer 2 Report
Comments and Suggestions for Authors
The paper provides an interesting study. Meanwhile, some comments are the following:
· Page 1. Please consider changing the name of the paper: a) “in China's Financial Sector” provides the impression that you studied only bonds in the Financial Sector, i.e. narrows the scope. b) “This study examines the issuance green premium of green bonds” This part is beyond the geopolitical risks, is not it?
· Page 3. “Secondly, in empirical research, strict screening criteria were set, pairing each green bond with a structurally similar conventional bond issued by the same entity, thereby eliminating multiple factors that could render them incomparable.” Meanwhile, on page 8 “Second, we establish the vanilla bond pool using Crabbe and Turner (1995) matching methodology. Each green bond is matched with non-green bonds that have similar structure and issuer characteristics, including currency, credit rating, interest rate type, coupon variety, tax rate, interest calculation, and repayment order.” Is the issuer green and non-green bonds the same or similar?
· Page 3. “the global Geopolitical Risk Index (GPR)”. Please conside to change the abbriviation. GPR is widely used in the paper as an abbreviation for Geopolitical Risk (not in the context of the particular index). For example, “Wang et al. (2023) believes that the easing of GPR has boosted renewable energy cooperation”
· Page 4. Figure 1. Please consider changing “Issuance Volume” to “Number of Issues”. Also, please add references to the left-side and right-side axes.
· Page 5. The statement of hypothesis uses “pricing”, and “priced” (in terms of yields?). Please consider making the statement clearer as it is done in the H2 statement “Increase green bond prices, lower their yields”. Also, please change the formatting of H1a, H1b, and H1c.
· Page 7. Please change “Wind provides” to “the Wind Economic Database provides”.
· Pages 7-8. “First, data cleaning techniques refined the green bond sample” “We first conduct data cleaning to build the green bond pool” Consider removing repetition.
· Page 8. “encompassing 6,043 and 60,497 trading days for green and vanilla bonds”. The number of trading days differs by 10 times, is it correct?
· Page 8. Please consider adding a graph for “The Recent GPR Index and the Historical GPR Index” from May 2018 to August 2021 to develop the intuition of the reader by visualization of data. On page 1, “Additionally, both recent and historical geopolitical risks, including GPR threats and GPR acts, significantly reduce green bond financing costs, with the China-specific geopolitical risk index having the most substantial impact, lowering costs by up to 17.4 bps.” Is this 17.4 bps a reaction to the changes in the geopolitical risks? If yes, should the statement of the result include a description of the changes in risks?
· Page 9. The variable “IssueSize” defined as “monthly issuance” is not clear. Please consider changing the definition.
· Page 10. For the cash units, the RMB is used in some cases, sometimes – yuan. Consider unifying.
· Page 10. “The overall sample features high credit ratings (average above AAA)”. Do you mean S&P, Moody’s, Fitch ratings? AAA is a very high rating. Please double-check.
· Page 19. “The sub-index GPR threats similarly reduce the cost by 0.1 basis points.” 10-5(!!!) Is that consistent with the accuracy of the model? The same question for 0.2 bps, 0.3bps.
· Conder using consistent terminology (for example. “270 green bonds and 667 conventional bonds”, “270 green bonds and 667 traditional bonds”, “270 green bonds and 667 vanilla bonds”)
· General Comment. The wording of the paper (from the presentation perspective) should be improved. There are minor but multiple inconsistencies, repetitions, etc. Some examples are provided above, but there are others as well. Such a presentation demolishes the obtained results.
Author Response
Subject: Thank You for Your Valuable Feedback on Our Manuscript
Notes: Please see the attachment
Dear Reviewer,
We hope this message finds you well.
We would like to express our sincere gratitude for your thorough review and valuable suggestions on our manuscript. Your insights have significantly contributed to improving the clarity，readability, and precision of our paper.
We have carefully addressed each of your comments and made the necessary revisions. Attached to this email, you will find a detailed response to your review, outlining how we have incorporated your feedback into the revised manuscript.
Thank you once again for your time and effort in reviewing our paper. We deeply appreciate your contributions and look forward to your favorable consideration of our work.
Best regards
Author Response File: Author Response.pdf
Round 2
Reviewer 1 Report
Comments and Suggestions for Authors
Congratulations to the authors for revising the document and for their detailed replies to the comments. However, some revisions are missing such as:
· The authors should rephrase some of the writing and avoid the first person.
· The authors should better detail the results obtained in the abstract, as well as the implications for both theory and practice.
Author Response
Subject: Thank You for Your Valuable Feedback on Our Manuscript
Notes: Please see the attachment
Dear Reviewer,
We hope this message finds you well.
We would like to express our sincere gratitude for your timely review and valuable suggestions on our manuscript. Your insights have significantly contributed to improving this paper.
We have carefully addressed each of your comments and made the necessary revisions. Specifically, we have rephrased sections to avoid the first person and detailed the results and implications in the abstract. The corresponding revisions are highlighted in blue in the re-submitted files.
Thank you once again for your time and effort in reviewing our paper. We deeply appreciate your contributions and look forward to your favorable consideration of our work.
Best regards,
Author Response File: Author Response.pdf
