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Cost Of Capital And Climate Risk In The Indonesian Bonds Market, Maulana Harris Harris Muhajir
Cost Of Capital And Climate Risk In The Indonesian Bonds Market, Maulana Harris Harris Muhajir
Bulletin of Monetary Economics and Banking
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 …