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Exploring the Nexus between Crude Oil Price and Stock Prices in Sub-Saharan Africa: A Case Study of Nigeria



Objective: The objective of this article is to investigate the connection between unrefined oil price and stock prices in Sub-Saharan Africa with particular accentuation on the Nigerian economy.
Research Design & Methods: Based on the time series data used, we applied co-integration test and a restricted Vector Autoregressive Approach to verify the existence of each short and long-term relationship among the variables of interest.
Findings: The results revealed that there is very little correlation between crude oil price and stock indices, thereby implying that such an impact cannot be completely expected in the short run. Moreover, the study showed causality relation running from crude oil price and real rate of exchange to stock indices.
Implications & Recommendations: Since the study disclosed that petroleum price and rate of exchange values have far more impact on stock market indices in the long run than in the short run in Nigeria with rate of exchange contributing more to the general changes in available market indices throughout the study period, thereby suggesting that stock exchange indices are insensitive to crude oil price variations in the short run and thus resulting in loss of confidence by the investors. Consequently, the study recommends that the sitting government ought to utilise the revenue generated on the sales of petroleum to diversify the economy.
Contribution & Value Added: In this study, we tried to point out the responses of crude price shocks to stock prices, particularly throughout the previous and current administration in Nigeria. The study was able to discover that changes in unrefined oil do not impact the stock indices.


crude oil price, VECM, stock market, causality, Sub-Saharan, Nigeria


Author Biography

Ditimi Amassoma

Economics Department / Assistant Professor

Matthew Ogbuagu

Ogbuagu Matthew

A PhD student, Lecturer II at the Department of Economics, Federal University Oye-Ekiti. His research focus is on Monetary economics and Energy economics.

Correspondence to: Mr. Ogbuagu Matthew, Federal University Oye-Ekiti, Department of Economics, 3 Afao road, Oye-Ekiti, PMB 373, Oye-Ekiti, Nigeria.



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