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ABSTRACT
Since the discovery of crude oil in Nigeria, the Nigeria economy has shifted her productive base from agriculture to crude oil and as such, the Nigeria economy has been a mono-product economy largely impacted by the effect of crude oil price fluctuations, especially as it relates to stock market performance. Accordingly, this study empirically investigates the nexus between crude oil price fluctuations and stock market performance in Nigeria for the period 1981-2019 by using the fully modified ordinary least squares (FMOLS) method and error correction model (ECM). The study analyses also the impact of exchange rate, inflation rate and interest rate on stock market performance in Nigeria. The empirical result suggests that both crude oil price fluctuations and exchange rate tend to exert positive impact on stock market performance in Nigeria while inflation rate and interest rate exert a negative impact on stock market performance in Nigeria. Accordingly, this study therefore recommend among others, the need to stimulate and diversify the productive base of Nigeria’s economy to reduce the overdependence on crude oil so as to minimize the adverse effect of such external shocks on the domestic economy, and also, macro-economic policies should be formulated and properly implemented so as to achieve macro-economic objectives of exchange rate stability, price stability, stability in interest rate regime and economic growth and development in Nigeria.
