Research on the Influence of Monetary Policy on Enterprise’s Behavior of Debt Financing
|Keywords||Monetary Policy Debt Financing Cash Holdings Investment|
As the reform of China’s economic system and the continuous improvement of China’s socialist market economic system, there is no doubt that the enterprise’s economic activities have been infiltrated into the capital market and enterprise’s economic activities are influenced by the country’s economic policy all the time. As a result, macroeconomic policy has become an important factor must be considered which when managers make corporate investment or financing decisions. In addition to considering technical constraints which formats by microeconomic factors such as enterprise’s own characteristics and governance factors when companies make financing decisions, determine the optimal level of cash holdings or investment levels, they must take market discipline which formats by macroeconomic factors such as monetary policy into consider. For these reasons, this paper used the monetary policy index which offered by the People’s Bank of China as a substitution variable of monetary policy to find if company’s debt financing and investment are affected by the People’s Bank’s monetary policy.Drawing on relevant literature’s methods and conclusions home and abroad, combining our country’s unique backgrounds, basing on corporate investment, financing and monetary policy situations, we put forward the research hypotheses of this paper. And then we used the seasonal data during from 2004 to 2009 which come from Chinese listed companies of Shanghai Stock Exchange Market and Shenzhen Stock Exchange Market empirically analyzed the impact of monetary policy on debt financing, cash holdings and investment. And we made further analysis if there were differences of different characteristics corporate and different region’s corporate. The following conclusions were confirmed:①When the monetary policy tends to be loose, enterprise’s bank loans will increase; when the monetary policy tends to be tight, enterprise’s bank loans will reduce. During the tight period, comparing with state-owned enterprises, the private enterprises’ bank loans decrease more; comparing with low-growth enterprises, the high-growth enterprises’ bank loans decrease more; comparing with labor-intensive enterprises, the capital-intensive enterprises’ bank loans decrease more. Furthermore, we discover that the bank financing are more sensitive to monetary policy changes in economically developed areas. These districts’ enterprise’s bank loans drop more. It shows that during the period of tight monetary policy, in addition to controlling excessive corporate investments in fixed assets, the credit resources is more likely to care state-owned enterprises, stable employment and developed regions’ enterprises, but not to aim at raising economic efficiency.②When the monetary policy tends to be loose, enterprise’s business credit financing will increase; when the monetary policy tends to be tight, enterprise’s business credit financing will reduce. And the stronger the product market competition is, the more corporate business credit financing will drop.③In the tight period of monetary policy, the corporate cash holdings will increase. What’s more, high-growth companies intend to increase more cash holdings. Further study was shown that the corporate cash holdings mainly come from the corporate financing activities and business activities, rather than investment.④During the time of short money supply, company’s investments will decrease. And the decrease is more significant in high-growth companies. This means that when tight time is expected to become, the manager will increase cash holdings for precautionary motive and decrease investment for financing constraints and raise of capital cost.