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August 16, 2026Thunderbird International Business Review

“Flight to Safety” Vis‐à‐Vis “Flight to Quality”: The Safe‐Haven Appeal of Green Indices in Developing Economies

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Authors

SAShivam AzadSDS. L. Tulasi Devi

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Overview

Time-series econometric analysis reveals that green indices provide superior risk-reduction benefits in emerging markets, suggesting enhanced portfolio resilience during energy transitions.

Key Points

  • To assess whether green equity indices serve as effective safe-haven assets and offer portfolio protection during market crises and climate-transition shocks in emerging economies.
  • Conducted a time-varying dependence analysis across major global and regional crises, including the COVID-19 pandemic and the Russia-Ukraine conflict.
  • Evaluated dependence and spillover dynamics between emerging market green equity indices, traditional safe havens (gold, sovereign bonds), energy commodities (oil, natural gas), and the S&P Green Bond Index.
  • Green equity indices displayed weak and regime-dependent co-movements with gold, sovereign bonds, oil, and natural gas.
  • Green indices maintained a strong, persistent relationship and significant spillovers with the S&P Green Bond Index, indicating deep integration with international sustainable finance.
  • Portfolios incorporating green-focused allocations and green bonds achieved superior risk reduction and greater stability compared to traditional asset allocations.

Cite This Study

Azad et al. (2026) studied this question.

synapsesocial.com/papers/6a817a72f2fb91fc834ae435https://doi.org/10.1002/tie.70155
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