IIARD International Institute of Academic Research and Development

WORLD JOURNAL OF FINANCE AND INVESTMENT RESEARCH (WJFIR )

E-ISSN 2550-7125
P-ISSN 2682-5902
VOL. 6 NO. 1 2022
DOI: https://doi.org/10.56201/wjfir.v6.no1.2022.pg62.82

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Assessment the Influence of OPEC Spot Price Fluctuation on Movement of Prices of Industrial Companies Listed on Nigerian Exchange Group (NGX): Dutch Disease Experience and Efficient Market Hypothesis

EFUNTADE, Olubunmi Omotayo, PhD, EFUNTADE, Alani Olusegun, FCIB, ACA.

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Abstract

This study examined the effect of Organisation of the Petroleum Exporting Countries (OPEC) spot price fluctuation on value of All share index Industrial Index (ININ) of Nigeria Exchange Group in Nigeria using time series data from 1981 to 2021. The study seeks to ascertain if OPEC spot price fluctuation alone can influence value of Industrial Index (ININ) of Industrial Companies in Nigeria Exchange Group. Autoregressive Distributed Lag Model (ARDL) was employed in analysing the data sourced. Results of the study revealed that interest rate has a negative but not significant effect on value of Industrial Index (ININ) of Industrial Companies in Nigeria Exchange Group in both short-run and long-run. Therefore, the study concluded that OPEC spot price fluctuation alone cannot significantly influence value of Industrial Index (ININ) of Industrial Companies in Nigeria Exchange Group, taking a bivariate regression model into consideration with only OPEC spot price fluctuation as the independent variable. Thus, the study recommended that OPEC spot price fluctuation should not be used alone to predict or influence the value of Industrial Index (ININ) of Industrial Companies in Nigeria Exchange Group. The study employed Granger non-causality test proposed by Toda and Yamamoto (1995) in both bivariate framework and both monthly and quarterly data in examining the relationship between the two variables. Nigerian industrial sector of the Nigeria Exchange (NGX) may be experiencing Dutch Disease due to dwindling stock performance of the sector. Dutch Disease theory predicts the manufacturing sector to decline as a result of mismanagement of caused of oil rev enues which is subject to oil price volatility. Industrial Index of industrial companies is discovered to be characterized of Weak form Efficient Market Hypothesis that is consistent with random walk hypothesis, i.e., stock prices move randomly, and price changes are independent of each other.

keywords:

Stock Prices, Dutch Disease experience, Efficient Market Hypothesis, Industrial Companies, OPEC spot price fluctuation and Organisation of the Petroleum Exporting Countries (OPEC)

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