Financial market developments and the minerals industry

Leroi Raputsoane

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyses the reaction of the minerals industry to financial market developments in South Africa. This is achieved by augmenting a Taylor 1993 rule type central bank monetary policy reaction function with the Johannesburg Stock Exchange (JSE), or financial market, index. The empirical results provide evidence of a statistically significant effect of an increase in financial market index on output of the minerals industry, which increases and peaks after 3 months, where this effect is statistically significant up to 5 months. The results further show that following an increase in output of the minerals industry, the financial market index increase slightly and peaks after 2 months as well as after 8 months with a statistically significant effect up to 2 months and between 8 and 10 months. Financial markets are, thus, important for the minerals industry hence policymakers should reduce impediments to financial market development given that a well functioning and regulated financial market has an important role in supporting aggregate economic activity as well as the minerals industry.

Keywords: Financial market; Minerals industry; Economic cycles (search for similar items in EconPapers)
JEL-codes: C10 E50 G10 L72 (search for similar items in EconPapers)
Date: 2025-01-04
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