A comparative analysis on risks and opportunities of green bonds in MINT countries: The case of Indonesia and Turkey

Social and environmental issues that are not included in economic calculations are the reasons why sustainable development is needed as a new paradigm for the pursuit of economic growth. Therefore, innovation in the financial sector is needed to guide investment that can create a balance in terms of economic, environmental, and social aspects. Green bonds are becoming an increasingly popular financial innovation in sustainable finance. Although relatively new, the volume of bond issuance in emerging markets have increased significantly. However, academic research on green bonds in these markets are still very limited. This comparative study aims to answer questions about the opportunities and risks of development by analyzing the development of these bonds in Indonesia and Turkey. The results of this academic research will propose a comprehensive framework for green bond development to strengthen and expand market ecosystems in both countries. According to the research findings, although the potential is relatively large, there are several challenges in both markets that could hinder the opportunities to develop green bonds. The results of the comparative study show that the involvement of the Turkish government in promoting green bonds issuance is relatively lower than Indonesia. The private sector is the sole player in green bonds issuance, and so far there has been no regulatory support from the Turkish government for green bond management. This is in contrast to Indonesia's green bonds issuance, which is more diverse by the green bonds issuance by the public and private sector with a larger volume of bonds. Through the SWOT analytical test, this research has identified several factors that could encourage and hinder the development of green bonds in both markets.