Browsing by Author "Silva, Mariana Bernardes da"
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- The determinants of firms' debt choice : sustainable bonds versus loansPublication . Silva, Mariana Bernardes da; Pinto, João Filipe MonteiroIncreasingly serious ecological problems have generated considerable focus on the environmental-friendly sustainable financial market. Although it has been experiencing rapid development, the rationales behind its growth remain largely unexplored. We examine the factors that influence firms’ choice between sustainable bonds and sustainable loans and identify its statistically significant determinants. A sample of sustainable loan deals and a matching sample of sustainable bond deals closed between 2018 and 2022, retrieved from DCM and Loan Analytics, was used. Using contractual information in conjunction with borrowing firms’ accounting and financial data, extracted from Datastream, we find that economies of scale, agency costs of debt and information asymmetry arguments affect the choice between sustainable loan and bond deals. The results show that sustainable bonds have longer maturities and are the preferred debt choice for firms with better creditworthiness, while high interest rates and larger deals make sustainable loans the primary choice.