Monetary Policy, Enterprise Heterogeneity And The Determinants Of Loan Maturity

Based on the data of entrusted loan transaction of Chinese Listed Company between 2004 and 2013 the paper empirically studies the impact of monetary policy on the loan maturity, which emphasizes the importance of asymmetric information, risk and ownership of companies. This study finds that tight monetary policy is significantly negatively correlated with the loan maturity. Further studies show that firm heterogeneity would make the effect of monetary policy on the loan maturity show big difference. On one hand, the more asymmetry information between borrowers and lenders and the greater borrowers' risk, the more significantly tight monetary policy reduces loan maturity; on the other hand, compared with the state-owned enterprises of borrowers, the effect of tight monetary policy on reducing the loan maturity of the private loan business is relatively more significant. These findings suggest that tight monetary policy can exert influence on the real economy by shortening the loan maturity, except by reducing the loan amount and raising the cost of capital. The policy implications of this study are very clear. As the effect of tight monetary policy on reducing the loan maturity of the younger, risker and private enterprises is particularly significant, the central bank and other relevant government departments should pay special attention to avoiding these companies suffering liquidity risk shock.