International Journal of Scientific Research and Engineering Development

This study examines the effect of oil price volatility on stock market returns using annual time series data spanning 1990 to 2024. The study is motivated by the persistent fluctuations in global oil prices and their implications for macroeconomic stability and financial market performance in oil-dependent economies. An Autoregressive Distributed Lag (ARDL) model is employed to analyze both short-run and long-run dynamics, incorporating key macroeconomic variables such as inflation, exchange rate, and interest rate. The results of the ARDL bounds test confirm the existence of a long-run relationship among the variables. Empirical findings reveal that oil price volatility exerts a negative but statistically insignificant effect on stock market returns in both the short run and long run. In contrast, inflation is found to have a positive and significant impact on stock market performance, while exchange rate and interest rate show weak but positive influences. The error correction model indicates a strong speed of adjustment toward long-run equilibrium, suggesting that short-term deviations are quickly corrected. Diagnostic and stability tests further confirm the robustness and reliability of the model. The study concludes that stock market returns are more responsive to domestic macroeconomic conditions than to oil price volatility. It therefore emphasizes the importance of maintaining macroeconomic stability and strengthening financial market structures to enhance resilience against external shocks.

Bello H.T, Adehi Thomas Adejo, Daniel Temitope Ijebomeh, Otuchi Emeka, Ramon Ajibola Emmanuel, Isreal Onyekachi Adizuo, Shodiya Bilqees Temitope, Bello Tajudeen Atanda,"Oil Price Volatility and Stock Market Returns in Nigeria: Evidences from Recent Data-Sets" International Journal of Scientific Research and Engineering Development, V9(2): Page(2223-2232) Mar-Apr 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.