The impact of oil price dynamics

Summary

The main thrust of this study is to investigate the impact of oil price dynamics represented by fluctuation in oil price per barrel, kerosene pump price fluctuation, diesel pump price fluctuation and petrol pump price fluctuation on credit to private sector which is a proxy for the Nigerian private sector. The research work adopted a secondary data for the period of 1990-2020. The technique of estimation adopted is the vector error correction model. However, before the regression analysis, unit root test was conducted to ascertain stationarity status of the variables while co-integration test was carried out using Johanson co-integration method to ascertain whether there is co-integration or long run association among the variables. Cholesky VAR normality residual tests, Serial correlation and Heteroscedasticity test were conducted to ascertain the credibility of the model. To further examine the short-run dynamic properties of the model, the forecast error variance decomposition (FEVD) was carried out. Lastly, the granger causality test was done to ascertain the causal relationship among the variables.