The Study On The Influence Of Monetary Policy And Financing Constraint On The Cash Holding Level Of Enterprises

Government intervention is a major feature of China's economy.The government can achieve the goal of macroeconomic growth by formulating macroeconomic policies,which will also affect the decision-making of enterprises'behaviors.The frequent intervention by the government increases the uncertainty of the macro-economic environment,while the cash held by enterprises is good for resisting the impact of macroeconomic fluctuation on enterprises.Monetary policy as one of macroeconomic policy,its impact on corporate cash holdings should not be ignored.Thus affecting corporate cash holdings.Therefore,based on the current economic environment in China,this paper studies the impact of monetary policy on corporate cash holdings.The optimal sequence financing theory shows that the financing order of an enterprise is determined by the financing cost.The cost of financing will increase with the increase of information asymmetry.Generally,internal financing is preferred by enterprises,followed by debt financing,and finally equity financing,and the financing cost gradually increasing.The change of internal and external environment of an enterprise affects the relative size of financing cost,and then affects the financial decision of the enterprise.External financing cost is high,enterprises have relatively more cash,while external financing cost is low.On the one hand,the monetary policy affects the decision-making of cash holdings by changing the financing cost and financing scale of enterprises.On the other hand,the change of monetary policy affects the forecast of enterprise management on the future economic situation,thus enterprises will adjust financial policies and change corporate cash holdings.Corporate external financing is influenced by the macroeconomic environment,and it depends on the microcharacteristics of the enterprise.In China,both direct financing channels and indirect financing channels have information asymmetry and enterprises generally face financing constraints.The degree of financing constraint faced by an enterprise is obviously different due to itscharacteristics(property nature,dividend payout ratio,enterprise size,etc.).This paper further analyzes whether the impact of tightening monetary policy on cash holdings of different enterprises is different from the perspective of financing constraints.This paper taking 2006 to 2016 listed companies in shanghai and shenzhen A sharesas the research sample,using panel and building a dynamic panel modelthrough empirical analysis found that during a period of tight monetary policy,companies will increase their cash holdings.The above conclusions have different effects in enterprises facing different financing constraints.From the perspective of financing constraint,this paper finds that compared with companies with low financing constraint,companies with high financing constraint hold a higher level of cash in the period of monetary policy tightening.In order to make the conclusion more convincing,this paper conducts the robustness tests on monetary policy and corporate financing constraints respectively.The results also support the above two conclusions.Based on the two conclusions drawn in this paper,the following suggestions are proposed:1.The PBC should have a flexible credit policy in the form of monetary policy,which makes monetary policy more balanced for different businesses.Commercial banks should relax the credit qualification requirements for enterprises with good credit standing and potential for development,and actively carry out product innovation so as to meet the requirements of different types of enterprises.The government should speed up the pace of interest rate liberalization and financial liberalization.2.At the level of the enterprise,the improvement in its own capacity helps to reduce the impact of tightening monetary policies on its business development.Firstly,enterprises should actively optimize the allocation of resources,improve the utilization rate of funds and the return rate of assets,improve the capital structure,and enhance investor confidence so as to reduce the difficulty of external financing.Secondly,enterprises should improve the transparency of information to reduce the degree of information asymmetry between enterprises and investors.Thirdly,the enterprise can expand the financing channel in the daily operation activities,and reduce the dependence on the credit of the bank.Finally,in view of the higher sensitivity of the company to the degree of financial constraint,the enterprise shall reasonably develop the corresponding operation plan,investment plan and financing plan in combination with its own characteristic in the course of operation.