Dynamics of Oil Price, Exchange Rate and the Trade Performance of Quoted Industrial Sectors at the all Securities Market (Asem) In Nigeria.
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Date
2022
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Advances in Social Sciences Research Journal
Abstract
The study examined the dynamic interaction among oil price, exchange rate and the
trading performance of quoted industrial sectors at the Nigerian stock exchange
market from 1980 to 2020 used in a Panel Vector Error Correction Mechanism
(PVECM) framework. Data were sourced from BP Energy Review, Central Bank of
Nigeria Statistical Bulletin and Annual report of the Nigerian Stock Exchange
Market. Findings showed that long run relationships were established for oil price,
exchange rate and the stock market performance of the industrial sectors. The
result revealed a long run negative relationship among oil price, exchange rate and
the stock market performance of the industrial sector. In the absence of possibility
of complete shift of the burden of oil price rise on to the consumers, the profits and
dividends of companies are reduced which may result into decline in stock prices
on the long run. The study suggested that variations in oil price and exchange rate
are two strong macroeconomic factors which also stand as a risk factor to the
performance of the Stock Exchange Market both at the aggregate market level and
the disaggregated industrial sector level, therefore, government policies need to be
redirected towards controlling for both the negative and positive effect of the risk
factors as their impact on the Stock Exchange Market is revealing from this study.
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Keywords
Oil price, Exchange rate, Quoted industrial sectors, Panel Vector Error Correction Mechanism, Nigerian stock exchange market