Research background: The effect of the green economy on green bond market development with the moderating role of institutional quality receives no attention in empirical studies. The cognizance of this effect is necessary for the investors and government as it helps them gain advantages from investing in green bonds. The institutional quality creates a strong relationship between the green economy and green bond market development as the higher institutional quality promotes the green bond market. Purpose of the article: This research mainly aims to estimate the effect of the green economy on green bond market development with the moderating role of institutional quality using data from the USA from 2009Q1 to 2021Q2. Methods: The data are analyzed using an appropriate and comprehensive econometric method: the “Autoregressive Distributed Lag Model.” Findings & value added: The study found a significant moderating effect of institutional quality on the relationship between the green economy and green bond market development. This research outlines the benefits of the green economy in relation to the green bond market development and its determining factors for the USA. By doing this, the key concerns that must be considered for the issuance of future green bonds are emphasized. The influential factors of green bond market development are green economic growth, green innovation, green trade, environmental tax, and institutional quality. Institutional quality is emphasized as the most crucial determinant. Thus, the results in the USA context add up to the available knowledge on the green bond market development. The insights of this study are fruitful for green bond market development and further development of the literature on green bonds within the state and across the world.