| Publication |
2012.
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| Summary/Abstract |
This paper investigates how a firm's characteristics restrict the influence of monetary policy changes on its investment behavior. Focusing on China's listed companies for a sample period from the first quarter of 2002 to the first quarter of 2011, we find that quantity-oriented and price-based monetary policies have heterogeneous impacts on corporate investment behavior, but the influence of monetary policies is constrained by the liquidity, inventory, size and asset-liability ratio of a firm. Firms with higher liquidity, lower inventory level and lower asset-liability ratios are less sensitive to the impact from two kinds of monetary policies. The larger the size of the firm, the less it is subject to influence from quantity-oriented monetary policy; it responds more to price-based monetary policy. The policy implication is that the monetary authorities should pay attention to the importance of policy-making based on the monetary demand of microeconomic entities.
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