| This paper mainly research the impact of the mechanism between interest rates changes, net worth and investment behavior. The effect of interest rates changes on business investment was multifaceted, this paper analyzes the effect by the variable of net worth. Through the analysis of the impact of the net worth on the corporate financing, this paper analyzes the role of the net worth in investment behavior; and analyzes financial accelerator effect of interest rates changes on business investment by mechanism of the balance sheet, with both theoretical and empirical methods. This paper firstly describes the theory of business investment, corporate financing and interest rate transmission mechanism. Then this paper introduces systematic theoretical analysis on the impact of the mechanism between interest rates changes, net worth and investment behavior. Based on the theories and previous empirical studies home and abroad, this paper sets up an empirical model by using the sample of A-share listed companies in Shanghai Stock Exchange and Shenzhen Stock Exchange, which covers a total of 276 individual companies of the manufacturing corporates over the period of 1999-2006, in this paper we analyze the impact of interest rates changes and net worth to the business investment.Through empirical analysis, this paper found that changes in interest rates has an inverse relationship with net worth, and net worth has a positive relationship with investment, so this paper confirms the balance sheet mechanisms of business investment. However, the empirical analysis found that interest rates has a positive relationship with business investment, indicating that the enterprises' investment has a positive correlation with interest rate changes through some other channel not be verified. Therefore, in this paper we consider that China's corporate investment is not sensitive to interest rates changes in negative impact, but the company's net worth of enterprise has played an important role. |
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