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

Authors

  • Chibueze E. Onyeke University of Nigeria Nsukka
  • Ifeoma Nwakoby
  • Josaphat U. J. Onwumere
  • Ifeoma Ihegboro
  • Chidiebere Nnamani

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.Keywords: Oil Price, Stock Returns, Structural VAR.JEL Classification: GDOI: https://doi.org/10.32479/ijeep.10189

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Published

2020-10-10

How to Cite

Onyeke, C. E., Nwakoby, I., Onwumere, J. U. J., Ihegboro, I., & Nnamani, C. (2020). Impact of Oil Price Shocks on Sectoral Returns in Nigeria Stock Market. International Journal of Energy Economics and Policy, 10(6), 208–215. Retrieved from https://econjournals.com/index.php/ijeep/article/view/10189

Issue

Vol. 10 No. 6 (2020)

Section

Articles

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