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This study aimed to explore the determining factors for green bond markets in ASEAN plus three countries. In contrast to previous publications that primarily examined the incentives for green bonds and institutional differences among economies, the analysis focused on the role of competition among sub-financial sectors in fostering the growth of green bond markets.

This study adopted Driscoll and Kraay fixed effect panel methods to account for country-level heterogeneity and enhance efficiency, using quarterly data from 2016 to 2022.

The findings showed that healthy competition among sub-financial sectors was crucial for the growth of green bond markets. Growth in specific sub-financial sectors such as brown corporate bond and stock markets as well as banks contributed positively to these markets. Variables related to market microstructure also had no significant impact on green bonds but macroeconomic factors did.

The findings suggested that governments should promote healthy competition among sub-financial sectors and implement diverse policies to ensure the sustainable growth of green bond markets.

This study further pioneered the importance of competition among sub-financial sectors for the development of green bond markets.