A Study On Tight Monetary Policy’s Impact On Corporate Cash Management

Changing macroeconomic policy brings uncertainties to enterprise management, thereby increasing the enterprise liquidity risk. Excessive loose monetary policy stimulus will generate inflation that is known as Economic bubble, however, a series of serious problems brought by the tight monetary policy period, especially the impact of the cash management should not be underestimated. When faced with tight monetary policy, whether the enterprise increase or decrease the cash holdings, how does cash adjustment speed performance between the different nature of the enterprise, which are the focuses of this paper.This paper used A-share listed companies’ financial data to explore the corporate cash management strategy in our country. By reviewing the current researches on this field both at home and abroad, established the theory and model framework of this paper, empirically studied the tight monetary police’s impact on cash management listed companies in our country. The conclusion verified that when the central bank embark on tightening monetary policy, the enterprise will increase the cash holdings. When facing tight monetary policy, non-state-owned enterprises tend to hold more cash than state-owned enterprises. The cash holdings of non-state-owned enterprises change in the process of dynamic adjustment when the monetary policy changes constantly, which lead to higher cash holdings and faster adjusting speed than state-owned enterprises.Through the analysis of micro enterprise’s financial data, made a research on the monetary policy’s significantly effect on corporate management, which provided macro monetary policy transmission mechanism with microeconomic foundation. Moreover, this paper considered the time lag effect of the monetary policy, built the dynamic panel data model, and used the Hausman method to estimate the parameters, avoided the defect of the method of ordinary least squares.