Green bonds provide firms with a credible way to finance environmentally eligible projects, but the label comes with extra documentation, verification, and reporting costs. This paper examines when those costs become binding by studying how country-level administrative frictions interact with green regulation, local investor demand for green assets, and green market infrastructure in shaping the choice to issue a labelled green bond rather than a conventional bond. Using a global panel of MSCI World firms matched to corporate bond issuances from 2013–2024, we estimate Probit models of green labelling conditional on bond issuance, test institutional moderation via interactions and conditional marginal effects, and address selection into bond markets with Heckprobit. To strengthen causal interpretation, we exploit staggered adoption of mandatory sustainability disclosure rules in a Callaway–Sant’Anna difference-in-differences event study. We find that administrative frictions reduce green labelling in baseline models and mainly matter by weakening institutional channels. Green regulation, investor demand, liquidity, and advisory infrastructure all increase the likelihood of green issuance, with investor demand the strongest driver but substantially less effective in high-friction environments. Effects are amplified in transition-intensive sectors, while frictions are more constraining outside core transition industries. Disclosure adoption raises green issuance by about 9 percentage points on average, with effects that appear immediately and grow over time. Overall, the results show that administrative capacity constrains corporate green bond development and that sustainable finance policies work best when implementation is efficient.
