Business Fluctation,Monetary Policy And Corporate Financing And Investment Behavior

Enterprise is a unit of the whole economic system,the economic output of the macro economy is derived from the sum of the output of each enterprise.The total change of enterprise behavior is consistent with the overall realization of macroeconomic.Changes in the macroeconomic environment will also affect the behavior of enterprises.The effectiveness of economic policy such as monetary policy,fiscal policy,etc.is ultimately reflected in the performance of enterprises.It can be said that the motives and the results between the enterprises and the policies are a dynamic game process.The infinite feedback loop mechanismeventually leads to business fluctuations.From the perspective of corporate financing and investment behavior,adverse macroeconomic environment will lead to the rising of interest rates and the decline in the value of collateral,at same time increase the difficulty of corporate finance andworse enterprises' finance.Butduring an economic boom process or in a loose monetary policy environment,enterprises facing financial difficulties can fully enjoy the benefits of higher financial leverage.Obviously,the impact of business fluctuation and monetary policy adjustments will be enlarged by financing,enterprises will face greater systemic risk.The bank for International Settlements reported in2016,that most countries in the world are in the "triangle" of the macro economy,that is,productivity is declining,leverage is rising and the macroeconomic policy space is shrinking.These issues are particularly prominent in China."Super money","difficult"and "expensive" financing of small and medium enterprises are two parallel problems in China's economy.Capital hot and economy cold is a significant feature of China's current economic operation.Macro statistics show that these problems have not been solved but deteriorated.From2012 to 2016,China's financial assets expanded rapidly,M2/GDPjumped from 174%to 203%.Monetary expansion rate is 5.8%higher than the GDP growth rate.The proportion of GDP in the financial sector rose from 6%in 2012 to $8%,while the proportion of manufacturing added value decreased from 33%to 30%.More seriously,with the continuous strengthening of policy efforts,private investment in fixed assets fellsharply in 2016 and it's been going on.For the assessment of the effect of the policy,there is a large deviationbetween the central bank and theacademic institutions.For example,for farmers and Small and micro businesses credit level,the central bank believes that more than 80%.But the study of the Chinese household financial investigation and research center of Southwestern University of Finance and Economics shows that only about 30%.The deviation between the financial and the real economy,the deviation between the monetary authorities and the research institutions,put forward a strong challenge to the implementation of monetary policy.YWhere is the problem?The problem is in the process of making monetary policy,implementation or the conduction?Based on background of the China's latest round of business fluctuation,this thesis choose the years from 2000 to 2015 as the research interval.The research path of this paper included business fluctuation fluctuation-monetary policy adjustment-corporate finance-corporate investment-macroscopic feedback of microscopic behavior.Using the economic cycle theory,monetary policy theory and corporate finance theory,we analyze the interaction among the economic fluctuations,monetary policies and corporate behaviors,and make a series of empirical tests on the transmission mechanism and the transmission channel between them.In the study,we focus on the following propositions:(1)Economic cycle fluctuations and monetary policy adjustments will affect the corporate financing structure.(2)Different sources of funds play different roles in the micro transmission mechanism of monetary policy.(3)The substitution of internal financing and other funds will lead to the uncertainty of cyclical changes in debt financing.(4)The substitution effect of internal financing and other funds will enlarge the effect of monetary policy through credit channel.This thesis consists of four parts and includes the following eight chapters.The first part is the basis of the research,which is composed of the first chapter and the second chapter.The first chapter focuses on the background of the topic,research significance,research objectives,research content,technical route,research methods and related concepts,as well as the innovation and shortcomings of this thesis.The second chapter gives a brief introduction to the main theories of corporate finance,business fluctuations and monetary policy,and makes a review and comment on the main research literatures in their respective fields.The purpose is to sort out the overlapping context and make a comprehensive comparison of the theories and research conclusion,explain the theoretical background and ideological source and highlight the innovation of this thesis.The third chapter is an independent part of this thesis is to explain the reality of the background.In this chapter we defined the research interval by defining the business fluctuation stage andmade a review of the main performance of China's macro economy and the implementation of monetary policy during the study period.At the same time,some macro variables to be used in the following text are also discussed through the above discussion.The third part is the key and core content of this thesis,which consists of the fourth chapter to the seventh chapter.These four chapters are closely related to each other.Among them,the fourth chapter focuses on the impact of the business fluctuations and the adjustment of monetary policy on the scale,the structure and the cost of the enterprise financing.Based on the conclusions of the fourth chapter,the fifth chapter analyzes and tests the effect of monetary policy on the enterprise's investment behavior and the transmission efficiency.Playing the financial crisis as a special period of the business fluctuation,the sixth chapter examines the impact of financial crisis,influence channel and the effect of unconventional monetary policy.Usingthe data from the macro variables the seventh chapter verified the conclusions of the previous chapters,and made a further research on the role that the financing structure plays in the monetary policy transmission.The eighth chapter is the last part of this thesis,which summarizes the research contents of the thesis,points out the limitations and prospects of the research in the future:The main conclusions of this thesis include the following three aspects:(1)Business fluctuation and monetary policy adjustment will affect the financing behavior of enterprises,but also have different effects on different sources of capital structure.Corporate financing behavior in general is a positive business fluctuation.With macroeconomic growingthe internal financing and debt financing will increase also.The behaviors of corporate finance are also asymmetricalwith business fluctuation.In the economic growth period,the investment's dependence on the internal financingdeclined,debt financing rose.But in the economic downturntheir performances are opposite.The fluctuation change of the corporate debt financing is mainly manifested in the change of the term structure.Liquidity liabilities are consistent with the business fluctuation,but long term liabilities are counter cyclical.Monetary policy will also affect corporate financing behavior.The expansion of monetary policy will reduce the investment's dependence on internal financing,significantly increase the operating liabilities and long-term financial liabilities,at the same time will significantly reduce the debt financing cost.(2)Business fluctuation and monetary policy will affect corporate investment through multiple channels.The investment of enterprises shows the stage difference in the business fluctuation,that is,the investment expenditure of the enterprise is significantly larger than that of the economic downturn.Business fluctuation affected corporate investment mainly by internal financing,debt financing(mainly long-term financial liabilities)and financing costs.The influence effect and the channels of the monetary policy are more complex.The money supply is positively related to the enterprise investment expenditure,but the credit scale and the market interest rate are negatively correlated with the enterprise investment expenditure.Money supply plays its rolemainly through the influence of long-term liabilities,credit mainly through the influence of operating liabilities,but market interest rate does not have obvious channels.The results from the macro and inter provincial panel data also show that self-financing will amplify the impact of monetary policy through credit channels.(3)In the special period of financial crisis,monetary policy has played a limited role.As an external shock,the financial crisishas played a negative role in enterprises'operation and investment spending,first through the capital supply channels,and then into a channel of external demands.The financial crisis affected corporate investment mainly through the channels of corporate cash holdings,long-term liabilities,especially long-term financial liabilities.Evidence from the listedcompanies showed that the central bank's unconventional credit stimulus plan during the financial crisis was ineffective in increasing corporate investment spending.The main innovation of this thesis includes the following three aspects.First,somenew research perspectives are given and a better research framework is constructed in this thesis.The framework of this thesis is more comprehensive,and the research perspective is more extensive.Based on the business fluctuation,we put the business fluctuation,monetary policy and corporate investment behavior into a unified theoretical framework for analysis and discussion by choosing finance as a link,taking the financing and investment behavior of enterprises as the micro starting point,andmonetary policy adjustment as a macro entry point,using the theory of business fluctuation,the theory of financial investment and financial accelerator.The business cycle theory,the theory of corporate finance and the theory of financial accelerator have been synthesized in this thesis.Second,the analysis of the effect of monetary policy and its transmission mechanism in the present study usually ignores the influence of internal financing.In this thesis,on the basis of the"financial accelerator theory",by constructing a IS-LM model which contains internal financing,two new propositions are proposed and proved.The first proposition,the external financing cyclical changes are uncertainty,because of the substitution of internal financing.The first proposition,the substitution effect of internal financing will enlarge the effect of monetary policy through credit channel.Third,we refine the related concepts and make a multi-level empirical study.The concept of debt financing has been further divided and defined.Corporateliabilities are divided into operating liabilities and financial liabilities in accordance with the sources and uses of liabilities,and are divided into current liabilities and long-term liabilitiesAccording to the term structure.Through these divisions we conducted a more detailed examination and analysis on the transmission mechanism and efficiency of monetary policy based on debt financing channels.