Impact of Oil Prices on Stock Market Development in Selected Oil Exporting Sub-Saharan African Countries

Muritala Adewale T. (), Ijaiya Adeniyi M., Adekunle Ahmed O., Nageri Ibraheem K. and Yinus A. Bolaji
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Muritala Adewale T.: Department of Accounting and Finance, Fountain University Osogbo, Nigeria,, ORCID: 0000-0002-9946-0159.
Ijaiya Adeniyi M.: Department of Finance, University of Ilorin, Kwara State, Nigeria, ORCID: 0000-0002-6981-0924.
Adekunle Ahmed O.: Department of Accounting & Finance, Kwara State University, Molete, Kwara State, Nigeria.
Nageri Ibraheem K.: Department of Accounting& Finance, Al-Hikmah University, Kwara State, Nigeria.
Yinus A. Bolaji: Department of Accounting, University of Ilorin, Kwara State, Nigeria, ORCID: 0000-0003-4266-4764.

Financial Internet Quarterly (formerly e-Finanse), 2020, vol. 16, issue 2, 1-13

Abstract: This study examines the dynamic impacts of oil prices on stock market development in four oil exporting sub-Saharan African countries in the period of 1989-2015. The Arbitrage Pricing Theory (APT) is used as the theoretical framework where stock market prices are hypothesized to be fully reflective of all available information. Static panel data (Pooled OLS, panel Fixed Effect Model, panel Random Effect Model) and dynamic panel model of Generalized Method of Moments (GMM) were employed in the estimation. The estimation of the static panel model shows that oil prices, exchange rates, gross domestic product, inflation and the corruption index have a positive and significant impact on stock market development. However, there is a slight improvement from the estimation of the GMM dynamic panel model which confirmed that oil prices, exchange rates, gross domestic product, investment, inflation and the corruption index have a positive and significant impact on stock market development. The study therefore recommends that investors in selected the Sub-Sahara Africa (SSA) stock market need to be cognizant of the varying impacts of macroeconomic indicators, particularly those that have been found to exert strong influence on stock returns like oil prices, exchange rates, inflation and the corruption index.

Keywords: Oil Price; Stock Market Development; Panel Data; Africa (search for similar items in EconPapers)
JEL-codes: C23 G10 N27 O55 Q43 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:finiqu:v:16:y:2020:i:2:p:1-13:n:6

DOI: 10.2478/fiqf-2020-0008

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