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Impact of Oil Price Shocks on Sectoral Returns in Nigeria Stock Market

Author

Listed:
  • Chibueze E. Onyeke

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

  • Ifeoma Nwakoby

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

  • Josaphat U. J. Onwumere

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

  • Ifeoma Ihegboro

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

  • Chidiebere Nnamani

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

Abstract

This paper investigates the impact of oil price shocks on stock returns in Nigeria using monthly data on four sectoral indices Banking, Insurance, Food, Beverages, & Tobacco (FB&T) and Oil & Gas (O&G) over the period January 2010 to December 2018. The oil price shocks are decomposed into precautionary demand, aggregate demand, and supply sources. The outcome of the estimation of a Structural Vector Autoregressive (SVAR) model suggests that precautionary demand oil shock had negative and significant impact on the sectoral returns except for FB&T whose response was insignificant; aggregate demand oil shock had a negative but insignificant impact on the sectoral returns but for the O&G sector whose response was positive although insignificant; whereas oil supply shock had a positive but insignificant impact on the sectoral returns in the Nigerian stock market. However, O&G sector was the only exception with negative response to oil supply shock, albeit, insignificantly.

Suggested Citation

  • Chibueze E. Onyeke & Ifeoma Nwakoby & Josaphat U. J. Onwumere & Ifeoma Ihegboro & Chidiebere Nnamani, 2020. "Impact of Oil Price Shocks on Sectoral Returns in Nigeria Stock Market," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 208-215.
    • Handle: RePEc:eco:journ2:2020-06-27
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    References listed on IDEAS

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    2. Muhammad Syafii Antonio & Aam S. Rusydiana & Wahyu Sugeng Imam Soeparno & Lina Nugraha Rani & Wahyu Ario Pratomo & Abdillah Arif Nasution, 2021. "The Impact of Oil Price and Other Macroeconomic Variables on The Islamic and Conventional Stock Index in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 418-424.

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    More about this item

    Keywords

    Oil Price; Stock Returns; Structural VAR.;
    All these keywords.

    JEL classification:

    • G - Financial Economics

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