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<p>In the wake of climate change-driven business and financial models, green bonds are crucial in the sustainable financing, and have grown rapidly. On the contrary, the oil though instrumental driver of growth in an economy, is polluting fossil fuel. In this context, this study examines the interlinkages among crude prices and the S&amp;P Green Bond Index. This study applies the ADF test to check the unit root in time-series data from January 2013 to February 2024. Further, the Study applies Dynamic Johansen cointegration, DCC-GARCH, and wavelet coherency techniques to check the linkages among oil and green bonds. The results of wavelet coherency indicate higher co-movement at the time of COVID-19 and Russia-Ukraine war. Furthermore, the dynamic Johansen integration suggest a long-term relationship between the variables, however in robustness checks, long-term connectedness is not supported. Similarly, as per the DCC-GARCH model, the volatility spillovers between the variables are not significant. This study has potential implications for policy makers as well as investors working on climate financing. The study concludes that the green bonds index is independent of the oil prices fluctuations.</p>

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Green Bonds and Crude Oil Prices: Exploring Dynamic Linkages and Implications for Climate Financing

  • 期刊论文

  • 发表日期：

    2026年2月17日

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  • Haseen Ahmed

摘要

In the wake of climate change-driven business and financial models, green bonds are crucial in the sustainable financing, and have grown rapidly. On the contrary, the oil though instrumental driver of growth in an economy, is polluting fossil fuel. In this context, this study examines the interlinkages among crude prices and the S&P Green Bond Index. This study applies the ADF test to check the unit root in time-series data from January 2013 to February 2024. Further, the Study applies Dynamic Johansen cointegration, DCC-GARCH, and wavelet coherency techniques to check the linkages among oil and green bonds. The results of wavelet coherency indicate higher co-movement at the time of COVID-19 and Russia-Ukraine war. Furthermore, the dynamic Johansen integration suggest a long-term relationship between the variables, however in robustness checks, long-term connectedness is not supported. Similarly, as per the DCC-GARCH model, the volatility spillovers between the variables are not significant. This study has potential implications for policy makers as well as investors working on climate financing. The study concludes that the green bonds index is independent of the oil prices fluctuations.