The effect of oil price shocks on stock market performance in selected African countries

Abstract

The study's objective was to investigate how changes in oil prices affect stock market performance. The study's population consisted of selected African countries chosen based on factors like the size of their stock markets and whether or not they import or export oil. The world development indicator (WDI) and the OPEC bulletin or website served as sources for the data. The vector error correction model was used to analyse the collected data. Regarding the impact of oil price fluctuations on the performance of the stock market, the findings of the study were mixed. Oil price fluctuations have a positive impact on stock market performance for countries that import oil. For oil‐trading countries, the impacts were found to differ across examined countries. Oil price fluctuations had a mixed effect on both large and small stock markets. This demonstrates how crucial it is to investigate changes in the price of oil and how they might impact stock market performance, particularly in African countries.

Revisiting the Causality between Oil Prices and Stock Markets in Selected MENA Countries: A Bootstrap Rolling-window Approach

“…The combination of these findings underscores the complexity of the relationship between oil prices and stock market behavior, emphasizing the need for a comprehensive understanding of the underlying factors that drive these interactions. In their study, Okpezune et al (2023) examined how oil prices relate to stock market performance in Africa, employing the Vector Error Correction Model. Their findings indicate a positive influence of oil price fluctuations on stock market performance in oil-importing countries.…”