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Oil Price Fluctuation and Firm Performance in Developing Economy: Evidence from Oman

Author

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  • Zaroug Osman Bilal

    (Department of Accounting, College of Commerce and Business Admiration, Dhofar University, Oman)

  • Shariq Mohammed

    (Department of Accounting, College of Commerce and Business Admiration, Dhofar University, Oman)

  • Yassir Yaqoub Ali

    (Department of Management, Faculty of Business, Sohar University, Oman)

Abstract

The study aims to investigate how oil continues to be the driving force of the Omani economy. Accordingly, changes in oil prices will have positive or negative impacts on all economic sectors. This study investigates the impact of oil prices on firm performance in 74 industrial and services companies listed on the Muscat Stock Exchange (MSM) from the years 2010 to 2018.This study s econometric model uses panel data regression since comprising time-series and cross-sectional data. The paper examines the effects of oil price fluctuations on the sampled firms performance. The statistical analysis indicates that oil prices have a significant positive impact on financial performance (as measured by return on assets - ROA) with the exception of the interest rate. Moreover, all fixed effects are highly significant for the five sectors. This result contributes to the literature by highlighting the impact of oil price on firm performance in Oman s industrial and service sectors. Both sectors are highly exposed and sensitive to oil price fluctuations. All regression coefficients in all sectors are highly significant, with the exception of interest rate, which has no impact on the profitability performance of the cement, oil, and textile industries. Moreover, both fixed and effects models are highly significant.

Suggested Citation

  • Zaroug Osman Bilal & Shariq Mohammed & Yassir Yaqoub Ali, 2021. "Oil Price Fluctuation and Firm Performance in Developing Economy: Evidence from Oman," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 381-387.
    • Handle: RePEc:eco:journ2:2021-03-46
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    References listed on IDEAS

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    2. Mohammad Aladwan & Omar Alsinglawi & Omar M. Alhawatmeh & Mohammad Almaharmeh, 2023. "Corporate Financial Performance and the Intervening Role of Energy Operating Costs: The Case of Jordanian Electricity Sector," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 202-212, September.

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    More about this item

    Keywords

    Oil price; Firm performance; ROA; panel data; industrial and service sectors; Oman.;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School

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