Monetary Policy And Corporate Commercial Credit: Evidence From China

Internal or external funds are needed for corporations to achieve commodity transactions.Commercial credit,a way to postpone payment in transactions,makes companies reduce the fund’s opportunity cost、finance more and improve business performance.Commercial credit is a popular and thought-provoking topic in corporate finance.At the academic level,a growing numbers of scholars paid attention to the impact of monetary policy changes on microeconomic behaviors due to the increasingly macro policy changes in recent years.In reality,after the outbreak of the “new coronavirus” in 2020,it has become a vital topic whether the government and central bank should regulate macroeconomic fluctuations through monetary policy changes.Commercial credit is a balance between supply and demand.In the face of the impact of policy changes,suppliers and purchasers of commercial credit will adjust their decisions.Therefore,it is of great significance to study the effect and mechanism of monetary policy on commercial credit.Based on the company-level data from the first quarter of 2006 to the fourth quarter of 2018,we study the influence of monetary policy changes on commercial credit,with the mechanism of the bank loans,Bargaining power and company investment in our analytical framework.According to empirical results,our findings Show that,when money supply falls and the monetary policy tends to tighten,commercial credit of companies will decrease.Commercial credit can ease the financing constraints of company because of its alternative financing function.This effect is positively impacted by monetary policy.Bargaining power is a significant factor for corporations to obtain commercial credit.This ability is strengthened when the monetary policy is tight.Corporations are inclined to use more commercial credit and increase investment facing the loose monetary policy.In addition,stateowned enterprises are better able to withstand the impact due to political advantages.Our research conclusions of this article are helpful to company managers making good use of corporate commercial credit and government introducing new administrative measures.The impact of monetary policy adjustment on commercial credit should be paid more attention in corporate operation.Company managers should judge on the impact of monetary policy adjustment.The government should pay attention to the actual effect of monetary policy implementation on the companies and implement monetary policy from the perspective of the interaction between policy changes and corporate commercial credit.