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Against the backdrop of the Covid-19 pandemic, this study explores the hedging and safehaven potential of green bonds for conventional equity, fixed income, commodity, and forex investments. We use the cross-quantilogram approach that provides a better understanding of the dynamic relationship between assets under different market conditions. Our full sample results show that the green bond index could serve as a diversifier asset for medium-and long-term equity investors. Besides, it can also serve as a hedging and safe haven instrument for currency and commodity investments. Moreover, the sub-sample analysis of the pandemic crisis period shows a heightened short-and medium-term lead-lag association between the green bond index and conventional investment returns. However, the green bond index emerges as a significant hedging and safe-haven asset for the long-term investors of conventional financial assets. Our results offer insights for long-term investors whose portfolios comprise conventional assets such as equities, commodities, forex, and fixed income securities. Further, our findings reveal the potential role that the green bond investments could play in global financial recovery efforts without compromising the low-carbon transition targets.

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Since its inception, Islamic banking in Pakistan has shown remarkable growth and development. Most recent statistics reveal that industry has captured around 13% of the total banking market in Pakistan. This outstanding growth of the industry highlights the crucial role of Islamic banks for monetary policy considerations. This study aimed to evaluate the role of Islamic banks in the monetary transmission process in Pakistan. The study examined the role of two most crucial balance sheet items of Islamic banks in the monetary transmission process: (1) Islamic deposits and (2) Islamic financing. The paper employed time series techniques such as the J.J. co-integration test, Vector Auto Regression, Variance Decomposition Analysis and Impulse Response Function to investigate the role of Islamic banks in the monetary transmission process. The study sample covered the time period 2007-2017. The results revealed the significant role of Islamic banks in transmitting monetary decisions to the real economy. Moreover, the evidence demonstrated the active bank lending channel of Islamic banking in Pakistan. The findings also corroborated the functional role of Islamic banks along with their conventional counterparts for effective formulation of monetary policy in Pakistan.

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