Impact of Oil Prices on Stock Market Performance: Evidence from Top Oil Importing Countries

Abstract

This study aims to analyze the impact of oil price on stock market performance in top oil importing countries. We used balanced panel data over a sample period of 1995 to 2017 with annual frequency. The sample data was gathered from World Development Indicator (WDI), Global Financial Indicator (GFDI) and West Texas Intermediate (WTI). The sample data were analyzed using regression test under the assumptions of Hausman test. Findings obtained from the fixed effect model suggest that oil price has a negative and insignificant impact on stock market. Similarly, the exchange rate also showed negative and insignificant impact while inflation showed negative but significant impact on stock market. Moreover, GDP showed a positive and significant influence on stock market. Overall, this study recommends that the policy makers should anticipate the changes in oil prices in order to improve the health of stock market.