Monetary Policy,Corporate Cash Holdings And Investment Behavior

Over the past decade or so,China's monetary policy has played a crucial role in the regulation of China's macro economy.With the implementation of the US "shrinking the table",raising interest rates and tax reduction policies in recent years,the adjustment of China's monetary policy has attracted great attention.The manufacturing industry is China's pillar industry and the mainstay of the national economy.At present,China's manufacturing industry is large,mainly in the middle and low-end manufacturing industries,and high-end manufacturing is insufficient.In May 2015,the State Council formulated the "Made in China 2025" revitalization.An important policy of the manufacturing industry is to promote the transformation and upgrading of China's manufacturing industry.However,China's economic downward pressure is relatively large,and investment in manufacturing enterprises is slowing down.The adjustment of monetary policy will have a major impact on investment in manufacturing enterprises.Based on the 6710 microdata of 610 manufacturing enterprises during 2007-2017,this paper uses the dynamic panel estimation method(system GMM)to examine the impact of monetary policy on manufacturing enterprise investment.Moreover,it further tests the adjustment effect of cash holdings in the process of monetary policy impact on manufacturing enterprise investment,and the asymmetric effect of monetary policy on manufacturing enterprise investment.The main research conclusions are as follows:(1)Monetary policy is effective for corporate investment.Monetary easing will promote investment by manufacturing companies,and monetary tightening will inhibit corporate investment.China's monetary policy mainly adopts quantitative reserve instruments such as deposit reserve ratio,open market business and rediscounting,which makes it difficult to achieve diversified and differentiated precise regulation of corporate financing channels.Therefore,China needs to accelerate the reform of interest rate marketization,improve the formation mechanism of price-based monetary policy tools such as interest rates,and avoid excessive dependence of monetary policy on quantitative tools.Moreover,when formulating monetary policy,the central bank must reasonably choose monetary policy tools and their combinations according to the differences in risk sensitivity of micro-subjects to monetary policies in different monetary environments.(2)Cash holdings have a regulatory effect.The more cash-holding companies,the more monetary easing will promote the investment of enterprises,and the restraining effect of monetary tightening on corporate investment will be weakened.And for enterprises with low financing constraints,the effect of adjustment by cash holdings is poor.Non-state-owned enterprises and small enterprises will face more serious credit discrimination.During the period of monetary tightening,more cash should be reserved in advance to resist the adverse impact of monetary policy on corporate investment.(3)The impact of monetary policy on corporate investment is asymmetric.The monetary tightening has a stronger inhibitory effect on the investment of manufacturing enterprises than the incentive of monetary easing.In the current stage of the economy,the implementation of the "big water flooding" expansionary monetary policy is difficult to play a substantial role in the investment of China's manufacturing enterprises,and it is difficult to directly mobilize the enthusiasm of manufacturing enterprises.Therefore,at the current stage,it is necessary to stimulate investment demand by expanding expansionary fiscal expenditures such as infrastructure spending and tax cuts to promote the upgrading of the industrial structure of the manufacturing industry and maintain stable economic growth.