Assessing the Impact of Changes in Crude Oil Prices and Exchange Rates on the Performance of Nigeria’s Stock Market

Authors : Anaf Mohammed Tukur; Salihu Zummo Hayatudeen

Volume/Issue : Volume 8 - 2023, Issue 9 - September

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This study assessed the impact of changes in crude oil prices and exchange rates on the performance of Nigeria’s stock market. The analytical method used include: the ADF unit root test, ARDL bound test co- integration, ECM, and Pair-Wise Granger causality test. The study made use of yearly time series data that covered the years 1986 to 2022. According to the ARDL projections, the early favorable effects of crude oil prices eventually turn negative as a result of inflationary pressure. The short-run implications were confirmed by error correction modeling. Granger causality studies revealed that there is a bidirectional causal link between exchange rates and stock market performance, but not between the price of crude oil and stock market performance. The empirical models demonstrated diagnostic validity. Key findings show that oil prices and macroeconomic factors such as interest and inflation rates drive Nigeria’s stock market. The paper recommends diversifying the economy by developing other sectors such as agriculture, manufacturing and services. This would alleviate excessive dependence on oil exports and insulate the stock market from associated vulnerability. It also recommends increasing investor education and awareness, monitoring inflation and interest rates, and managing exchange rate fluctuations.

Keywords : Stock market performance, crude oil price, exchange rate, inflation and interest rate, ARDL.


Paper Submission Last Date
31 - December - 2023

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