Authors :
Anaf Mohammed Tukur; Salihu Zummo Hayatudeen
Volume/Issue :
Volume 8 - 2023, Issue 9 - September
Google Scholar :
https://bit.ly/3TmGbDi
Scribd :
https://tinyurl.com/wrxf8k82
DOI :
https://doi.org/10.5281/zenodo.8421276
Abstract :
This study assessed the impact of changes in
crude oil prices and exchange rates on the performance
of Nigeria’s stock market. The analytical method used
include: the ADF unit root test, ARDL bound test co-
integration, ECM, and Pair-Wise Granger causality test.
The study made use of yearly time series data that
covered the years 1986 to 2022. According to the ARDL
projections, the early favorable effects of crude oil prices
eventually turn negative as a result of inflationary
pressure. The short-run implications were confirmed by
error correction modeling. Granger causality studies
revealed that there is a bidirectional causal link between
exchange rates and stock market performance, but not
between the price of crude oil and stock market
performance. The empirical models demonstrated
diagnostic validity. Key findings show that oil prices and
macroeconomic factors such as interest and inflation
rates drive Nigeria’s stock market. The paper
recommends diversifying the economy by developing
other sectors such as agriculture, manufacturing and
services. This would alleviate excessive dependence on oil
exports and insulate the stock market from associated
vulnerability. It also recommends increasing investor
education and awareness, monitoring inflation and
interest rates, and managing exchange rate fluctuations.
Keywords :
Stock market performance, crude oil price, exchange rate, inflation and interest rate, ARDL.
This study assessed the impact of changes in
crude oil prices and exchange rates on the performance
of Nigeria’s stock market. The analytical method used
include: the ADF unit root test, ARDL bound test co-
integration, ECM, and Pair-Wise Granger causality test.
The study made use of yearly time series data that
covered the years 1986 to 2022. According to the ARDL
projections, the early favorable effects of crude oil prices
eventually turn negative as a result of inflationary
pressure. The short-run implications were confirmed by
error correction modeling. Granger causality studies
revealed that there is a bidirectional causal link between
exchange rates and stock market performance, but not
between the price of crude oil and stock market
performance. The empirical models demonstrated
diagnostic validity. Key findings show that oil prices and
macroeconomic factors such as interest and inflation
rates drive Nigeria’s stock market. The paper
recommends diversifying the economy by developing
other sectors such as agriculture, manufacturing and
services. This would alleviate excessive dependence on oil
exports and insulate the stock market from associated
vulnerability. It also recommends increasing investor
education and awareness, monitoring inflation and
interest rates, and managing exchange rate fluctuations.
Keywords :
Stock market performance, crude oil price, exchange rate, inflation and interest rate, ARDL.
