Research On The Impact Of China's Monetary Policy Framework On Corporate Cash Holdings

Cash is the “blood” of a company,and a reasonable and effective cash holding level can guarantee a better development of the company.In recent years,the level of cash holdings of Chinese enterprises fluctuated greatly.This paper starts with a deeper monetary policy framework that affects cash holdings.Through the theoretical analysis of the demand and source of cash holdings and the development of the monetary policy framework,we find that the impact of the monetary policy framework on the level of corporate cash holdings is different.This paper selects Chinese listed companies from 2008 to 2017 as observation targets,introduces time dummy variables of monetary policy framework,studies the impact of different monetary policy frameworks on corporate cash holdings,and how different monetary policy frameworks affect the other influencing factors of cash holdings.It is concluded that: First,the overall level of corporate cash holdings shows different changes under different monetary policy frameworks.Under the credit scale,the shadow banking business caused by the credit scale increased,and the cash holdings of enterprises increased.Under the dynamic adjustment of differential reserves,the level of cash holdings of enterprises began to decrease.Before the macro-prudential evaluation system,the overall level of corporate cash holdings remained stable.Second,the introduction of the monetary policy framework dummy variables and the interaction variables of firm size and investment opportunities found that the effect of the scale of credit scale offsets the negative impact of firm size on cash holdings,and also affects the positive role of investment opportunities.As negative correlation,cash demand and supply do not match,and there is a serious financial mismatch.Under the dynamic adjustment of differential reserves,the positive impact of investment opportunities is still offset,showing a negative correlation,and the negative impact of firm size has not occurred.Changes and financial mismatches have been initially alleviated;under the macro-prudential assessment system,mismatches have been further corrected.The negative impact of firm size and the positive impact of investment opportunities are in line with the classical theoretical assumptions of cash holdings,but corporate cash the level of holding does not depend entirely on the investment needs of enterprises and financing constraints.The monetary policyframework still affects the level of cash holdings of enterprises to a certain extent.The research also finds that under the effect of the scale of credit,the relationship between bank and enterprise is positively correlated with the level of cash holdings of enterprises.Under the macro-prudential evaluation system,the cash holding level of state-owned enterprises is significantly higher than that of private enterprises,and the cash demand of private enterprises is still unable to be satisfied.The study found that the macro-prudential management framework of monetary policy has played a role in solving financial mismatches.This paper proposes that the People's Bank of China should further improve and strengthen macro-prudential management,improve the interest rate marketization mechanism,strengthen credit support for small and micro enterprises and private enterprises,and promote the steady de-leverage of the real economy;commercial banks strengthen their own management and build a diversified financial structure.Multi-pronged measures to solve the financing problems of private enterprises,help reform the financial supply side,and improve the financial support for the development of the real economy.