scholarly journals DO OIL PRICE SHOCK, AND OTHER MACROECONOMIC VARIABLES AFFECT THE STOCK MARKET: A STUDY OF THE SAUDI STOCK MARKET

2020 ◽  
Vol 8 (3) ◽  
pp. 1234-1242 ◽  
Author(s):  
Naushad Alam
Keyword(s):  
Stock Market ◽  
Negative Relationship ◽  
Oil Price ◽  
Security Market ◽  
Oil Price Shocks ◽  
Price Shocks ◽  
Short Term ◽  
Macroeconomic Variables ◽  
Oil Price Shock ◽  
Price Shock

Purpose of the study: This work aims to find the type of relationship amongst the chosen variables, inflation (INF), short-term interest rate (SIR), money supply (M.S.) and crude oil price (COP) and oil price shocks represented by DUMMY respectively on the capital market of Saudi Arabia. It will also throw insight to policymaker to find factors which influence the capital market of Saudi Arabia and to take remedial measures to boost investment in the country. Research Methodology: The relationships amongst the Saudi security market, the oil price shock, and the selected macroeconomic variables as mentioned above are determined using the Johansen test of co-integration, the vector error correction model, and the Wald test. The research employs the time series data for a period of 2009to 2016, for the study. Findings: The results show a long-run equilibrium relationship between the Saudi stock market and the selected variables for the study. The study shows a positive association between the money supply and the stock market, but inflation, short-term interest rate, and crude oil price, the result indicates a negative relationship. Implications: The present study can have implications for the policymaker to take corrective measures for better performance of the stock market by controlling inflation and regulating the short-term interest rate.As the findings indicate that they have a negative relationship with TASI. This paper will also help the policymaker in identifying the real cause for the decline in the value of the stock price. A good performing stock market means better economic growth and overall economic development. To diversify the economy to have an alternative to the oil-driven economy to a more balanced economy by promoting other sectors like manufacturing and tourism. Novelty/Originality of this study: The literature review confirms that all work of oil price shock is related to its effect on the security market return. This work is different from the other study as it includes macroeconomic variables in the study, together with the oil price shocks. The study is unique from other studies as it is broader in approach, by including more variables than earlier studies which mostly included the oil price shocks and its impact on the stock market. There is no work done to investigate the joint effect of macroeconomic variables and oil price shocks on the Saudi stock market.

scholarly journals The Effect of Oil Price Shocks on the Dynamic Relationship between Current Account and Exchange Rate: Evidence from D-8 Countries

2013 ◽  
Vol 52 (4I) ◽  
pp. 537-556
Author(s):  
Syeda Qurat-Ul-Ain ◽  
Saira Tufail
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
Oil Price ◽  
Empirical Literature ◽  
Oil Price Shocks ◽  
Price Shocks ◽  
Oil Price Shock ◽  
Price Shock ◽  
External Sector ◽  
The Relationship

The effect of oil price shocks on global economy has been a great concern since 1970s and has instigated a great deal of research investigating macroeconomic consequences of oil price fluctuations. Later on, the instability in the Middle East and recent oil price hike confirmed the enduring significance of the issue. Though a voluminous body of literature has evolved examining the bearings of oil prices for internal sectors of economies [to name a few, e.g., Barsky and Kilian (2004); Kilian (2008a,b); Hamilton (2008)], the studies analysing the external sector response to oil price shocks are very few [see, e.g. Kilian, et al. (2007)]. The determination of current account and exchange rate—the two major indicators of external sector—has been studied widely in theoretical and empirical literature but mostly the discussion of the two variables largely remained separate [Lee and Chinn (1998)]. Similarly, investigation of simultaneous response of these two variables to an oil price shock remained relatively less ventured avenue of research. Initial work done on the relationship between current account and oil price could not ascertain conclusive link between these two variables.1 Recent work on the issue revealed the diversity of responses of current account of different countries to an oil price shock. For instance, oil price increase deteriorates current account balance of developing countries [OECD (2004); Rebucci and Spatafora (2006); Killian, et al. (2007)] but may improve it if the country happens to be a net oil-exporter. This implies that the relationship depends on the number of factors among which oil dependency of country, oil-intensity of production process2 and responses of non-oil trade balance3 and sources of oil price fluctuations4are of particular significance.

scholarly journals Do Oil Price Shocks and Other Factors Create Bigger Impacts on Islamic Banks than Conventional Banks?

Energies ◽  
2020 ◽  
Vol 13 (12) ◽  
pp. 3106
Author(s):  
Jabir Esmaeil ◽  
Husam Rjoub ◽  
Wing-Keung Wong
Keyword(s):  
Oil Price ◽  
Oil Price Shocks ◽  
Islamic Banks ◽  
Price Shocks ◽  
Gcc Countries ◽  
Long Run ◽  
Oil Price Shock ◽  
Price Shock ◽  
Conventional Banks ◽  
Conventional And Islamic Banks

The main aim of this study is to empirically examine and compares the impacts of oil price shocks, Arab revolutions, some macroeconomics, and bank-specific variables on bank profitability indicators between Conventional and Islamic banks in Gulf Cooperation Council (GCC) countries. The study employed panel Autoregressive-Distributed Lag (ARDL) techniques to examine the causal relationship both at the short and long-run. Our results reveal that most of the variables employed in our study significantly influence Return on Asset (ROA), Return on Equity (ROE), and Net Interest Margin (NIM)/ Net Profit Margin (NPM) for both Conventional Banks (CBs) and Islamic Banks (IBs) similarly in the long run. Findings from our study imply that both CBs and IBs have some similar features in nature, which could be because of the structure of the policies for IBs is in line with the regulatory framework for the CBs. The main finding from the study is the significance of oil price shock and the Arab springs that are more pronounced in CBs than IBs. Also, it can be seen that a sustainable profit of IBs is higher than CBs due to the adjustment speed of IBs to equilibrium in the presence of shock is found to be higher than CBs. Hence, our study suggests that oil price shock could be utilized for having a prudent macro regulation for the banks in GCC countries. Our findings are useful to Government officers, bankers, investors, and researchers for their decision making by estimating future trends of the profitability for both Conventional and Islamic banks in the GCC countries.

scholarly journals Oil Price Shocks, Fuel Subsidies and Macroeconomic (In)stability in Nigeria

2020 ◽  
pp. 1-38
Author(s):  
Babatunde S. Omotosho
Keyword(s):  
Exchange Rate ◽  
Oil Price ◽  
New Keynesian ◽  
Oil Price Shocks ◽  
Price Shocks ◽  
Oil Price Shock ◽  
Price Shock ◽  
Fuel Subsidies ◽  
Short Run ◽  
The Exchange Rate

This paper studies the macroeconomic implications of oil price shocks and the extant fuel subsidy regime for Nigeria. To do this, we develop and estimate a New-Keynesian DSGE model that accounts for pass-through effect of international oil price into the retail price of fuel. Our results show that oil price shocks generate significant and persistent impacts on output, accounting for about 22 percent of its variations up to the fourth year. Under our benchmark model (i.e. with fuel subsidies), we show that a negative oil price shock contracts aggregate GDP, boosts non-oil GDP, increases headline inflation, and depreciates the exchange rate. However, results generated under the model without fuel subsidies indicate that the contractionary effect of a negative oil price shock on aggregate GDP is moderated, headline inflation decreases, while the exchange rate depreciates more in the short-run. Counterfactual simulations also reveal that fuel subsidy removal leads to higher macroeconomic instabilities and generates non-trivial implications for the response of monetary policy to an oil price shock. Thus, this study cautions that a successful fuel subsidy reform must necessarily encompass the deployment of well-targeted safety nets as well as the evolution of sustainable adjustment mechanisms.

THE IMPACT OF OIL PRICE SHOCKS ON THE U.S. STOCK MARKET

2009 ◽  
Vol 50 (4) ◽  
pp. 1267-1287 ◽  
Author(s):  
Lutz Kilian ◽  
Cheolbeom Park
Keyword(s):  
Stock Market ◽  
Oil Price ◽  
Oil Price Shocks ◽  
Price Shocks ◽  
The Impact ◽  
The U.S

The macroeconomic effects of increase and decrease in oil prices: evidences of asymmetric effects from India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anver Chittangadan Sadath ◽  
Rajesh Herolli Acharya
Keyword(s):  
Negative Impact ◽  
Wholesale Price ◽  
Oil Prices ◽  
Petroleum Products ◽  
Oil Price ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Real Gdp ◽  
Oil Price Shock ◽  
Price Shock

Purpose The purpose of this paper is to assess whether oil price shocks emanating from oil price increase and decrease have a different impact on the macroeconomic activity. Design/methodology/approach This study conducts the empirical analysis using structural vector auto-regressive model on Indian data for the period from 1996 to 2017. This paper uses four key macroeconomic variables, namely, real gross domestic product (GDP), the real rate of interest, real money supply, wholesale price index inflation and various linear and non-linear measures of oil price shock. Findings Empirical results confirm that oil price shock has a significant impact on various macroeconomic variables used in the study. Specifically, shocks emanating from a decline in oil price have a stronger positive impact on real GDP, whereas, a shock due to the rise in oil price has a weaker negative impact on real GDP. Impulse responses confirm that shocks due to a decline in oil prices are long-lasting compared to similar shocks due to a rise in oil prices. Therefore, this study concludes that the macroeconomic impact of oil price shock is asymmetric in India. Originality/value This paper adds the following new insights: First, this paper presents a distinct relationship between the growth rate of oil price and GDP during increasing and decreasing phases of oil price to drive home the case for this study. Second, India has adopted crucial administrative initiatives such as deregulation of the market for petroleum products and the promotion of renewable energy during the study period. Finally, previous studies have revealed specific behavioral and economic features of people in India with respect to the demand for petroleum products. In light of these factors, this paper based on Indian experience would be justified.

scholarly journals IMPACT OF OIL PRICE SHOCKS ON SECTORAL RETURNS IN NIGERIA STOCK MARKET

2020 ◽  
Vol 10 (6) ◽  
pp. 208-215
Author(s):  
Chibueze E. Onyeke ◽  
Ifeoma Nwakoby ◽  
Josaphat U. J. Onwumere ◽  
Ifeoma Ihegboro ◽  
Chidiebere Nnamani
Keyword(s):  
Stock Market ◽  
Oil Price ◽  
Oil Price Shocks ◽  
Price Shocks
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