Monetary Policy, Nature Of Property Right And Cash Holdings Of Companies

Monetary policy is an important means of macroeconomic regulation and control in our country, the financial crisis in 2008, the people’s Bank of China cut the bank deposits interest rate many times, adopted loose monetary policy, at the end of 2007, the government has advocated tight monetary policy, the people’s Bank increases the money supply in 2012, adopts loose monetary policy. Obviously, the change of monetary policy impacts the macro economy, since the production and economic activities and financing and investment activities of companies are in the certain macroeconomic environment, so monetary policy will affect the companies’operation and financing, which will change the cash holdings level of a company. In recent years, although the scholars gain a lot of research results on corporate cash holding behavior, from the perspective of monetary policy research the cashing holdings is less. In this context, the article discusses the monetary policy’s impact on cash holdings.The article first reviews the theoretical basis of cash holding behavior, the trade-off theory, the pecking order theory and the agency theory; then summarizes the empirical research of scholars both at home and abroad, divides into two parts, micro and macro factors, on this basis, being theory analysis, puts forward the research hypothesis. In the empirical part, the paper chooses the research variables, constructs the research hypothesis model, chooses the samples from the Shenzhen stock exchange and Shanghai stock exchange over the period from 2003 to 2011, obtains 1164 samples and 10476 observations, through the descriptive statistics, Pearson correlation analysis and multiple regresson analysis to study the influence of the monetary policy to the cash holdings, and analyzes the impact of monetary policy on cash holdings under the different property right nature.This paper draws a conclusion:loose monetary policy will reduce the cost of external financing, thus reduce the company’s cash holdings level; tight monetary policy will increase the cost of external financing, so as to improve the level of cash holdings. On this basis, the paper further analyzes the different nature of property right, under tight monetary policy, the level of State-Owned Company’s cash holding is lower than the non State-Owned Company. According to the above conclusions, the paper puts forwards several policy suggestions:improve the level of government macro research, thus enhance the level of corporate cash management; perfect the financial markets, reduction non State-Owned enterprise financing constraints; conpany need set up related system, set up reasonable cash target.