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The Role of Stock Market Development on Economic Growth in OPEC Countries: Does Oil Price Movement Matter? Fresh Evidence from Nigeria

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  • Kingsley Okere
  • Paul Ndubuisi

Abstract

This study investigates the relationship link crude oil price and stock market development and economic growth in one of the OPEC countries with emphasis on Nigeria over the period 1981 to 2014, using the latest methodology autoregressive distributed lag approach (ARDL) to cointegration analysis. Three indicator of stock market development are constructed using principal component analysis. The revels the dominant role of rule oil price as one of the engine for economic growth in Nigeria. Using inflation and trade openness as a moderator on economic activities in Nigeria, this study found that stock market is insignificant in driving economic growth in Nigeria indicating poor financial sector performance. In general, the results highlight the dominant role crude oil price and posits the weakness of the stock market in stimulating economic growth through resource mobilization and allocation in Nigeria. Therefore for government to achieve sustainable economic development and maximize stock market performance, policy maker in oil exporting countries should monitor the movement of crude oil prices.

Suggested Citation

  • Kingsley Okere & Paul Ndubuisi, 2017. "The Role of Stock Market Development on Economic Growth in OPEC Countries: Does Oil Price Movement Matter? Fresh Evidence from Nigeria," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 5(2), pages 194-207.
    • Handle: RePEc:asi:ajemod:v:5:y:2017:i:2:p:194-207:id:899
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    1. repec:arp:sjbmms:2021:p:35-45 is not listed on IDEAS
    2. Ndubuisi N. Udemezue & Catherine A. Nneli & Stephen F. Aleke & Frankine C. Okeke, 2024. "Evaluating Sustainable Relationship between Stock Market Development and Nigeria’s Economic Growth," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(1), pages 2449-2470, January.
    3. Wajdi Hamza Dawod Alredany, 2018. "A Regression Analysis of Determinants Affecting Crude Oil Price," International Journal of Energy Economics and Policy, Econjournals, vol. 8(4), pages 110-119.
    4. Charles O. Manasseh & Nnah M. Iroha & Kingsley I. Okere & Ifeoma C. Nwakoby & Ogochukwu C. Okanya & Nnenna Nwonye & Onuselogu Odidi & Oliver I. Inyiama, 2022. "Application of Markov chain to share price movement in Nigeria (1985–2019)," Future Business Journal, Springer, vol. 8(1), pages 1-14, December.
    5. Ngozi G. Emenogu & Monday Osagie Adenomon & Nwaze Obini Nweze, 2020. "On the volatility of daily stock returns of Total Nigeria Plc: evidence from GARCH models, value-at-risk and backtesting," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-25, December.
    6. Esmaeil Ebadi & Yousef Abdul Razaq, 2024. "Reinvestigating the Oil Dependency of the GCC Countries’ Stock Market: A Regime-Switching Cointegration Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 14(3), pages 387-406, May.

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