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Energy Prices and the Nigerian Stock Market

Author

Listed:
  • Felix Chukwubuzo Alio

    (Department of Banking and Finance, University of Nigeria, Enugu Campus, Enugu, Nigeria)

  • Victor O. Okolo

    (Department of Marketing, University of Nigeria, Enugu Campus, Enugu, Nigeria,)

  • Obiamaka P. Egbo

    (Department of Banking and Finance, University of Nigeria, Enugu Campus, Enugu, Nigeria)

  • Hillary Chijindu Ezeaku

    (Department of Banking and Finance, Caritas University, Enugu, Nigeria.)

Abstract

This paper analysed the relation between the stock market indices and the developments in the international energy market using historical monthly data from January 1985 to December 2017. Energy prices as applied in the study are composed of changes in the prices of crude oil, natural gas and liquefied natural gas. We employed the traditional VAR techniques in estimating the linkages between the variables of interest. Our findings showed that changes in energy prices did not have significant influence on the stock market. Although there was evidence of a long-run relationship between the two variables, no causal relationship was found to exist between them; this entails that past values of the prices of crude oil, natural gas and liquefied natural gas were not vital in predicting the developments in the stock market. Likewise, lagged values of the stock market indices were not instrumental in forecasting the movements in energy prices. Thus, we conclude that the stock market could be more responsiveness to other macroeconomic indicators other than the energy prices.

Suggested Citation

  • Felix Chukwubuzo Alio & Victor O. Okolo & Obiamaka P. Egbo & Hillary Chijindu Ezeaku, 2019. "Energy Prices and the Nigerian Stock Market," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 33-37.
    • Handle: RePEc:eco:journ2:2019-06-4
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    References listed on IDEAS

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    3. Vesarach Aumeboonsuke, 2021. "Commodity Prices and the Stock Market in Thailand," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 34-40.
    4. Nurkhodzha Akbulaev & Elshan Mammadli & Gadir Bayramli, 2022. "The Effect of Energy Prices on Stock Indices in the Period of COVID-19: Evidence from Russia, Turkey, Brazil, and India," International Journal of Energy Economics and Policy, Econjournals, vol. 12(3), pages 262-269, May.

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    More about this item

    Keywords

    Energy price; stock market; Granger Causality; Vector Autoregressive; Nigeria;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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