A Research On Industrial Differences In The Effectiveness Of Interest Rate To Investment In China

This paper concludes the research on the industrial differences in the effectiveness of interest rate to investment in China.This paper uses empirical study to test the existence of industrial differences in the effectiveness of China's interest rate to investment. Based on the difference of investment variables, eight VAR models of the whole China, the primary industry, the secondary industry and the tertiary industry are founded into two groups. The paper compares the response and the cumulative response of output in interest rate shocks in the impulse response function, and the contribution of interest rate to output in the variance decomposition, then makes the conclusion that there are very notable industrial differences in the effectiveness of interest rate to investment in China. If "total investment in fixed assets" represents the investment, the impact of interest rate to investment in tertiary industry is significantly stronger than that in secondary industry; If "financial institution loan" represents the investment, the impact of interest rate to investment in secondary industry is stronger than that in tertiary industry. The impact in both the secondary industry and the tertiary industry is stronger than that in the primary industry.In order to explain the results of the empirical study above, this paper analyses the causes of industrial differences in the effectiveness of interest rate to investment in China from the point of capital structure of corporate (the balance sheet of the corporate). Based on the panel data of the listed firms in China, the paper establishes a model and uses the regression model, the fixed-effect model and the random-model to do the research. In addition to this, other factors including the attributes of the bank and corporate can also affect the industrial differences in the effectiveness of interest rate to investment. Then relevant recommendations are given on this basis.