Monetary Policy, Growth, Cash-Cash Flow Sensitivity

To the enterprise cash is the lifeline of survival,development of the bloo(Chen Zhibin,2007). After the financial crisis, the financial management concepts "the supreme cash, cash is king" has been more deeply and got increasingly high priority to business executives.In the perfect frictionless capital markets, enterprises are easy to obtain the necessary funds from the external market. Therefore, companies do not have too much from internal cash holdings (Keynes,1936).However, in the real economic environment, due to the existence of asymmetric information and moral risks,the capital market is not perfect.There are differences in the cost of enterprise internal and external financing, that is, the cost of external financing is often higher than the internal financing cost, enterprises are facing financing constraints.Since the financial crisis, in order to cope with the changing economic environment, China has duly taken a series of monetary policy adjustment measures. However, in our particular system background, bank capital is the main source of corporate financing.These adjustment measures of monetary policy alter enterprise external financing constraint condition by changing the external financing capacity and financing scale,and then Impact the corporate cash-cash flow sensitivity. Meanwhile, due to monetary policy has asymmetric effects on micro enterprise entity, this asymmetry will lead to different growth enterprises different cash-cash flow sensitivity, that is,producing heterogeneous effect.The starting point of this study is based on macro monetary policy, the sample data choose from 2007 to 2013 in Shanghai and Shenzhen A-share listed companies of all quarterly financial statements.This thiese uses monetary policy perception index that is provided by the website of the People’s Bank of China, "Chinese monetary policy report" and "National Bankers Survey Report "of each quarter to measure the degree of tightening monetary policy.By using these data,this paper analyzes the relationship between macro monetary policy and micro enterprise cash-cash flow sensitivity when monetary policy changes.In addition, the paper also introduces a further factor "growth", which has a significant impact on corporate cash flow, examining the heterogeneous effect of monetary policy adjustment measures on different growth companies’ cash-cash flow sensitivity.The results of this study found that, when the macro monetary policy makes adjustment, external financing constraint condition of the enterprise also alongs with the change, and this change will be reflected in the firm’s cash-cash flow sensitivity. When monetary policy tighten,the enterprise’s financing constraints increase. For this reason, enterprises become more inclined to balance out cash flow which is generated from internal of enterprises to meet the needs of future investment, then enterprises generally exhibit higher cash-cash flow sensitivity. At the same time, this research also found that, the adjustment of monetary policy have heterogeneous effects on different growth companies, this is mainly reflected in the monetary policy tightening, high growth enterprises cash-cash flow sensitivity increased significantly.Results of this study not only provide business managers appropriate management advice to make reasonable and timely financial decisions according to the macro monetary policy adjustments, but also give the relevant state departments corresponding recommendations to regulate and control micro enterprises.