The Empirical Research Of The Influence Of Monetary Policy Adjustment To Firms’ Capital Structure

The capital structure is the core content of enterprise financing decision-making.For a long time, researches of numerous literatures on capital structure mainly focusedon micro level or industry level, ignoring influence of macroeconomic factors (e.g. themonetary policy adjustment) to capital structure. There is an interactive, dynamic andcyclical influence mechanism between macroeconomic policy and micro enterprisebehavior. The capital structure of enterprises is dynamic and adjusts continually totarget capital structure. The adjustment of monetary policy will influence the capitalstructure of enterprises through its micro transmission mechanism.This paper researches the influence of the adjustment of monetary policy to firms’capital structure on the basis of the theoretical analysis that how monetary policy affectcapital structure through its micro transmission mechanism. Firstly, this paper analyzesthe influence of the adjustment of monetary policy to capital structure from the staticperspective, and divides the samples into groups according to the scale of enterprisesand analyzes the difference of large and small firms’ response to the adjustment ofmonetary policy. Secondly, this paper analyzes the influence of the adjustment ofmonetary policy to the speed of adjustment of firms’ capital structure from the dynamicperspective and reveals the difference of the influence that the adjustment of monetarypolicy exerts on the different scale enterprises. The results show that:(1) monetarypolicy adjustment will influence the firm’s capital structure and enterprises will increaseliability scale in face of loose monetary policy and decrease liability scale in face oftight monetary policy;(2) compared with the large-scale enterprises, the influence ofmonetary policy adjustment to small scale enterprises is stronger;(3) the adjustmentspeed of capital structure will be accelerated during the period of loose monetary policyand slowed down during the period of tight monetary policy;(4) the capital structureadjustment speed of large-sale companies is faster than small scale companies;(5)large-scale firms and small firms will accelerate the adjustment speed of capitalstructure during the period of loose monetary policy, and will slow down the adjustmentspeed of capital structure during the period of tight monetary policy. However, in faceof the same type of monetary policy, the capital structure adjustment speed of differentscale companies has different sensitivity. The research of this paper is helpful to companies to optimize their capital structure and significant to the monetary authority toformulate and improve monetary policy.The main innovation of this paper lies in that:(1) this paper analyzes the influenceof monetary policy adjustment to firms’ capital structure deeply and comprehensivelyfrom the static and dynamic perspective. The combination of static and dynamicanalysis overcomes the limitation that the existing literatures analyzed this issue notdeeply enough from single perspective, and expands the depth and breadth of theresearch on capital structure;(2) it analyzes the micro transmission mechanism ofmonetary policy and combining the adjustment situation of Chinese monetary policy inrecent years, reveals the mechanism of action to capital structure emphatically fromcredit channel of monetary policy;(3) it divides the monetary policy into quantitativemonetary policy and price based monetary policy and measures the monetary policy inquantitative index, reflecting the adjustment situation of monetary policy continuously,accurately and objectively compared with the qualitative measurement by using thedummy variable.