Green Bond Market Development and Circularity in the EU-27: Material Use and Resource Productivity

Green bonds are intended to mobilise capital for environmental investment, yet evidence on their contribution to economy-wide circularity remains limited. This study examines whether national green-bond market development is associated with the circular material use rate and resource productivity in the EU-27. A balanced country-year panel covering 2014-2024 (297 observations) is analysed with country and year fixed effects, six controls, contemporaneous and one- and two-year-lagged green-bond shares, country-clustered standard errors, restricted wild cluster bootstrap-t inference with 9,999 repetitions, and Driscoll-Kraay sensitivity estimates. The complete-control samples contain 270, 243, and 216 observations for the current, L1, and L2 specifications. None of the six baseline models, 20 main robustness-model estimates, or 54 leave-one-country-out re-estimations yields a wild-bootstrap p-value below 0.10. Circular material use coefficients are consistently negative but imprecise, while resource-productivity coefficients change sign across timing and control choices. The findings do not support the two directional hypotheses and indicate no statistically robust conditional association over the observed period. Green-bond market size should therefore not be treated as sufficient evidence of circular-economy progress; allocation, additionality, and verifiable material outcomes remain decisive.