Monetary policy surprises and investment of non-listed real sector firms in China

Huoqing Tang, Chengsi Zhang and Hong Zhou

International Review of Economics & Finance, 2022, vol. 79, issue C, 631-642

Abstract: This study examines the dynamic effects of monetary policy on investment of non-listed real sector firms in China. We employ proxy vector autoregression analyses to extract China's monetary policy surprises and use firm-level data to investigate the dynamic effects of monetary policy. Empirical findings show that unanticipated expansionary monetary policy prompts investment of China's non-listed real sector firms in the first year of monetary policy surprises but has no positive accumulative effect on investment in the fourth year, suggesting that monetary easing shifts firms' investment to an early date rather than increases investment permanently. Group-division results present discrepancies between state-owned and private firms and among firms with different sizes. Further analysis provides evidence that the effect of monetary policy on non-listed firms' investment relates to external finance rather than investment opportunities.

Keywords: Monetary policy; Investment; Non-listed firms; Proxy-VAR; Local projection (search for similar items in EconPapers)
JEL-codes: E52 E58 G11 O16 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:79:y:2022:i:c:p:631-642

DOI: 10.1016/j.iref.2022.02.010

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