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Crude Oil Price Volatility and its Impact on Nigerian Stock Market Performance (1985-2014)

Author

Listed:
  • Olamide T. Ojikutu

    (University of Ibadan, Nigeria,)

  • Rita U. Onolemhemhen

    (University of Lagos, Nigeria,)

  • Sunday O. Isehunwa

    (University of Ibadan, Nigeria.)

Abstract

The impact of falling oil prices on stock market and exchange rates (EXRs) differs from country to country, either oil-exporting or oil-importing country. Empirically, previous studies have measured the impact of crude oil price (COP) volatility on stock market performance. However, limited studies exist for Nigeria and other oil exporting countries. Thus, this study seeks to fill the gap in existing literature by establishing the nexus between oil price, EXR and stock market performance in Nigeria. Using the ordinary least square estimation technique, the basic variables adopted in this study are all share index (ASI) which serves as a proxy for market performance, COP and EXR. Annual time series data covering the period of 1985-2014 was used to estimate the model using regression analysis. Based on the Trace statistics result, there exists one co-integrating relationship among ASI, COP, and EXR. The R2 = 0.505; showing that 50.5% of the variation in stock market performance can be explained by COPs and EXR. The F-statistic value of 2.17 (P

Suggested Citation

  • Olamide T. Ojikutu & Rita U. Onolemhemhen & Sunday O. Isehunwa, 2017. "Crude Oil Price Volatility and its Impact on Nigerian Stock Market Performance (1985-2014)," International Journal of Energy Economics and Policy, Econjournals, vol. 7(5), pages 302-311.
    • Handle: RePEc:eco:journ2:2017-05-34
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    References listed on IDEAS

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    1. Eisa Aleisa & Sel Dibooĝlu, 2002. "Sources of real exchange rate movements in Saudi Arabia," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 26(1), pages 101-110, March.
    2. Hedi Arouri, Mohamed El & Khuong Nguyen, Duc, 2010. "Oil prices, stock markets and portfolio investment: Evidence from sector analysis in Europe over the last decade," Energy Policy, Elsevier, vol. 38(8), pages 4528-4539, August.
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    Cited by:

    1. Iqbal Thonse Hawaldar & T. M. Rajesha & Lokesha Lokesha & Adel M. Sarea, 2020. "Causal Nexus between the Anamolies in the Crude Oil Price and Stock Market," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 233-238.
    2. Moses Tule & Afees Salisu & Charles Chiemeke, 2020. "Improving Nigeria’s Inflation Forecast with Oil Price: The Role of Estimators," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(1), pages 191-229, March.
    3. Mukhtar, M.N.A. & Hagos, Ftwi Y. & Noor, M.M. & Mamat, Rizalman & Abdullah, A. Adam & Abd Aziz, Abd Rashid, 2019. "Tri-fuel emulsion with secondary atomization attributes for greener diesel engine – A critical review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 111(C), pages 490-506.
    4. Muhammad Hanif, 2024. "Co-movement of Oil and Stock Markets During COVID-19: Evidence from the Gulf Corporation Council," Contemporary Review of the Middle East, , vol. 11(3), pages 338-359, September.
    5. Khanifah Khanifah & Udin Udin & Nor Hadi & Fitri Alfiana, 2020. "Environmental Performance and Firm Value: Testing the Role of Firm Reputation in Emerging Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 96-103.
    6. Hani El-Chaarani, 2019. "The Impact of Oil Prices on Stocks Markets: New Evidence During and After the Arab Spring in Gulf Cooperation Council Economies," International Journal of Energy Economics and Policy, Econjournals, vol. 9(4), pages 214-223.
    7. Chuke Nwude & Damilola Felix Eluyela & Elias Igwebuike Agbo & Francis O Iyoha, 2021. "The Influence of Oil Price Fluctuations on Stock Market of Developing Economies: A Focus on Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 100-109.
    8. Osaretin Kayode Omoregie & Sodik Adejonwo Olofin, 2020. "Corporate Performance in Nigeria: The Effect of Oil Price and Exchange Rate Fluctuations," International Journal of Economics and Financial Issues, Econjournals, vol. 10(1), pages 170-179.

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    More about this item

    Keywords

    Oil price; exchange rates; volatility; stock market;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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