Research On The Relationship Between Enterprise Demand For Money And Monetization Rate In China

Since the reform and opening up,China's monetization rate has continued to rise.Most early scholars believed that the continuous deepening of the monetization process in China was the main reason for the continued rise in the monetization rate.However,since the 21 st century,with the continuous deepening of China's marketization process and the end of the monetization process,China's currency rate remains high and rising,and scholars have begun to explain China's monetization rate from different perspectives,such as the angle of financial development,macro-currency demand,and micro-money demand.As the monetization rate continues to rise,the “supra-currency theory” has become a hot topic for scholars.China's monetization rate has its own unique mechanism,and it is unreasonable to conclude that China's currency is exceedingly high because of the high ratio of monetization rate.This article based on the monetary endogenous perspective,starting from the structure of China's money supply,studying the role played by various structures of M2 in various stages of China's monetization rate changes,analyzing the monetary requirements of economic agents and China's commercial banking system and shadow banking system,The transmission mechanism of money supply provides a reasonable explanation for China's rising monetization rate.First of all,this paper theoretically analyzes the relationship between corporate money demand and monetization rate.Based on the endogenous theory,it analyzes the credit creation of commercial banks,the creation of shadow banking credits,and the transmission mechanism of corporate money demand,and it also analyzes theoretically the influencing factors of Chinese companies' money demand.Then we mainly analyzed the relationship between the monetization rate of the corporate sector and the total monetization rate of China.After the data analysis,it is found that the monetization rate of the corporate sector is very consistent with the Chinese monetization rate,and the change in the monetization rate of the corporate sector has also contributed to the rising of the monetization rate in China.Then the paper divides the structure of money supply M2 into two parts: M1 and quasi-currency.It was found that the proportion of quasi-monetary accounting for M2 increased from M1 in 1988 and has been on an upward trend,while the M1/M2 ratio has been on a downward trend since then,and the proportion of companies' time deposits in quasi-currency has been rising.Although the proportion of personal time deposits is relatively large,the proportion of quasi-currency is declining.From this perspective,we believe that the rising rate of Chinese monetization is mainly due to the increase in corporate time deposits.According to the theory of money demand,corporate time deposits reflect the company's currency demand based on preventive motives.The increase in the proportion of corporate time deposits indicates that the company's demand for preventive money is continuously increasing,and it also shows that the company's currency needs are strengthened.Therefore,we believe that the rise of the company's preventive motives has led to an increase in corporate currency demand and this is reflected by the increase in corporate time deposits,which eventually led to the rising rate of Chinese monetization.After theoretical analysis and analysis of the monetization rate structure,in order to better verify the conclusions of this paper,this article carries out two parts of empirical analysis.The first is the study of the relationship between corporate money demand and China's monetization rate.We used cointegration analysis to determine that there is a long-term equilibrium relationship between corporate money demand and China's monetization rate.Then we analyzed the two by the Granger causality test.Causality determines that the company's money demand is the Granger cause of the change in China's monetization rate.Then we analyze the influencing factors of corporate currency demand.We use the financial statement data of listed companies to analyze the influence of financing constraints and investment opportunities on corporate currency demand.The study finds that investment opportunities and financing constraints have a significant positive effect on corporate currency demand.And the interaction between them will also have a significant impact on the proportion of corporate deposits.The empirical results are also in line with our theoretical expectations.In the last part,we reinterpret the trend of the monetization rate in China based on the results of theoretical analysis,structural analysis,and empirical analysis to further explain China's high monetization rate.We believe that there are three main reasons for the continuous monetization rate in China: The first is the continuous improvement of the credit creation capacity of the commercial banking system;the second is the rapid improvement of the credit creation capability of the shadow banking system;and third is the continuous strengthening of the company's demand for preventive money.On the basis of the monetary endogenous theory,these three reasons together strengthen the connection between money supply and money demand,and ultimately lead to a high rate of money in China.Based on the research conclusions of this paper,feasible policy recommendations are given.