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The Effect of the Relationship Between Oil Price and Stock Markets in Energy Sustainable Countries

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Abstract

The aim of this paper is to analyze and understand the relation between oil price and stock markets in the energy sustainable countries. The main hypothesis of the study is that the economies of the countries in which energy is sustainable are more resistant to changes in oil prices. The energy sustainability in this study is defined according to the Energy Sustainability Index prepared by World Energy Council (WEC). The relationship between the stock market performance of the group and oil prices was analyzed through Johansen Co-integration Test and Granger Causality Test in the 2004–2014 and 2008 Financial Crisis period (2008–2010). The result of the top 7 countries in the Energy Sustainability Index indicates that the stock market performance of the group is not co-integrated with oil prices. However, there is a co-integration between stock market performance and oil prices in the seven countries at the bottom, so economies of the bottom 7 countries are sensitive to oil prices. During the crisis period, a co-integration appears between the variables. Finally, none of the sub-indexes are individually fully compatible with the main index co-integration outcomes in the total period.

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Notes

  1. 1.

    WORLD ENERGY COUNCIL. (World Energy Council 2013a, b). World Energy Trilemma: World Energy Trilemma Time to Get Real—The Case for Sustainable Energy Investment, Project Partner: Oliver Wyman, London: World Energy Council Publication. ISBN: 978 0 946121 22 9, pp. 5.

  2. 2.

    These countries are mostly placed at the upper levels of Energy Sustainability Index of WEC. These are Australia, Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

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Author information

Authors and Affiliations

  1. Gazi University, Ankara, Turkey

    Şahnaz Koçoğlu

  2. Hacettepe University, Ankara, Turkey

    Mehmet Baha Karan

  3. Yıldırım Beyazıt University, Ankara, Turkey

    Ayhan Kapusuzoğlu

Authors
  1. Şahnaz Koçoğlu
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  2. Mehmet Baha Karan
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  3. Ayhan Kapusuzoğlu
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Corresponding author

Correspondence to Şahnaz Koçoğlu .

Editor information

Editors and Affiliations

  1. VU University Amsterdam, Amsterdam, The Netherlands

    André Dorsman

  2. University of Illinois at Chicago, Chicago, Illinois, USA

    Özgür Arslan-Ayaydin

  3. Business Administration, Hacettepe University, Ankara, Turkey

    Mehmet Baha Karan

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Koçoğlu, Ş., Karan, M.B., Kapusuzoğlu, A. (2016). The Effect of the Relationship Between Oil Price and Stock Markets in Energy Sustainable Countries. In: Dorsman, A., Arslan-Ayaydin, Ö., Karan, M. (eds) Energy and Finance. Springer, Cham. https://doi.org/10.1007/978-3-319-32268-1_8

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