The Impact of Sustainable Bond Issuances in the Economic Growth of the Latin American and Caribbean Countries

Abstract

There is beyond any doubt that Latin America is one of the most important emerging markets in the world, which has increased its importance in the last decades. In effect, the issues of green, social, and sustainability (GSS) bonds are gaining more and more importance in the Latin American and the Caribbean (LAC) financial markets. They are specifically focused on raising funding for public expenditure programs that contribute to achieving several objectives, such as climate and environmental projects, energy efficiency, pollution prevention, sustainable agriculture, fishery and forestry, etc. The main objective of this paper is to provide a literature revision of the evolution of the issuance of GSS bonds in the LAC region and to analyze the economic growth of the countries which issue this type of bond. We will apply multiple linear regression to relate the economic growth of some countries of the LAC region with the variables proposed by the IFC Emerging Market Green Bonds Report (2019). It has been shown that the economic growth of the countries in the LAC region that are issuing GSS bonds is significantly related to the Sovereign Green Issuance (Total Planned), the ratio of Private Credit/GDP, and the Rule of Law Index. However, this research has had the limitation of the scarcity of available data in the LAC markets.