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Oil prices and stock market price in N igeria
Author(s) -
Nwosa Philip Ifeakachukwu
Publication year - 2014
Publication title -
opec energy review
Language(s) - English
Resource type - Journals
eISSN - 1753-0237
pISSN - 1753-0229
DOI - 10.1111/opec.12013
Subject(s) - cointegration , economics , stock market , error correction model , oil price , cost price , financial economics , monetary economics , stock price , stock (firearms) , shareholder , econometrics , short run , finance , series (stratigraphy) , mechanical engineering , paleontology , corporate governance , horse , biology , engineering
This paper examined the relationship between oil prices (international oil price and domestic oil price) and stock market price in N igeria for the period spanning 1985:1 to 2010:4. The study utilised the J ohansen's multivariate cointegration test and the vector error correction model ( VECM ). The J ohansen's test showed that the variables are cointegrated, and the cointegration equation revealed that oil prices have significant relationship with stock market price in the long run. The VECM estimate only revealed a unidirectional causality from stock market price to international oil price in the long run. A unidirectional causality was also observed from domestic oil price to stock market price in the long run. The study recommended that policymakers, financial analyst and shareholders should into cognizance changes in international oil price and domestic oil price in their financial decisions given the significant impact of oil prices on stock market price in N igeria.