Research On Financial Constraints, Macroeconomic Monetary Policy And Dynamic Adjustment Of Capital Structure

The corporate capital structure has been the focus of academic community for many years. The capital structure can be treated as the situation of the corporate financing from a basic view, which reflects the ratio of the corporate debt and equity. The corporate capital structure reflects to a certain extent the ability of corporate debt repayment and refinancing, and it also reflects the corporate future profitability. Therefore, the capital structure is an important index to evaluate the financial situation of the enterprises. Reasonable capital structure reduces the operating costs of the enterprises, and plays a good role of regulation of financial leverage. The enterprise can use high debt leverage to achieve great benefits, and obtain sufficient funds to get a better growth.This paper studies in-depth the effects of the financial constraints and macroeconomic monetary policy on the dynamic adjustment of capital structure based on the fundamental theory of dynamic adjustment of corporate capital structure. Conclusions such as followed are found. Firstly, the financing constraints affect the dynamic adjustment process of the capital structure, thus the financing constraints hinder the transforming of the corporate capital structure to the target capital structure. Secondly, further investigation of the impact of monetary policy on the dynamic adjustment of corporate capital structure indicates that the implement of monetary policy plays an important role in the dynamic adjustment of corporate capital structure when financing constraints exist, especially in the following three aspects:1. The increase in the open market operations (net billings) will speed up the dynamic adjustment of the capital structure, and this effect becomes even larger for enterprises with a low financing constraints compared to those with high financing constraints.2. The downwards adjustment of deposit reserve ratio will speed up the dynamic adjustment of the capital structure.3. The downwards adjustment of rediscount rate will speed up the dynamic adjustment of the capital structure. Finally, an investigation is carried out to determine whether the financing constraints affect the dynamic adjustment rate of capital structure. It is concluded that the financing constraints has certain negative effect on the dynamic adjustment rate of capital structure.