Monetary Policy, Cash Holdings and Financial Development

Cash is the most current part in the assets. Analyzing the factor to influence cash holding is an important issue. Monetary policy is an important way of macro-control, which has an impact to the bank credits. In our country, the development of financial development has a serious region discrepancy. The differences lead to the level of enterprises' cash holdings is different in different areas. This paper selected 1 263 listed companies from 31 provinces, autonomous regions and municipalities as a sample, and the sample period is from 2008 to 2016. The empirical results show that when monetary policy is tightened by the loose changes, enterprises will raise the level of cash holdings. In the region which has a high level of financial development, the level of cash holdings is lower. In the region which has a high level of financial development, the changes of monetary have a lower influence on cash holding level.