Salisu, Afees A.Sikiru, Abdulsalam AbidemiOmoke, Philip C.2023-01-172023-08Salisu, A.A., Sikiru, A.A. & Omoke, P.C. COVID-19 pandemic and financial innovations. Quality & Quantity 57, 3885–3904 (2023). https://doi.org/10.1007/s11135-022-01540-4.0033-5177 (print)1573-7845 (online)10.1007/s11135-022-01540-4https://repository.up.ac.za/handle/2263/88865This study is motivated around the COVID-19 pandemic as a source of rising financial market risks. Hence, we investigate whether pandemic-induced risks can be hedged by alternative investment in financial innovations captured in exchange traded funds (ETFs). We explore the hedging effectiveness of sectoral ETFs along with a battery of robustness measures. Following the predictability analyses, we find that financial innovations captured in ETFs can effectively hedge both pandemic-induced and financially engineered market risks especially after controlling for the role of oil price in the predictive model. Our model provides better in-sample and out-of-sample forecasting accuracy and economic gains than the benchmark model and this is more pronounced for the COVID-19 pandemic period.en© The Author(s), under exclusive licence to Springer Nature B.V. 2022. The original publication is available at : http://link.springer.comjournal/11135.COVID-19 pandemicCoronavirus disease 2019 (COVID-19)Pandemic, hedgeFinancial innovationExchange traded funds (ETFs)PredictabilityPostprint Article