Monetary policy and corporate financing: Evidence from different industries

To reveal the effect of monetary policy on corporate financing, this study compared the effect of tightened monetary policy on bank loans and commercial credit financing for real estate companies and manufacturing companies. We further analyzed the land purchase behaviors of typical real estate companies under different monetary policies. The results indicated the following: (1) The effects of monetary policy were heterogeneous among different industries. Tightened monetary policy significantly inhibited the financing scale of manufacturing companies in terms of both bank loans and commercial credit, but it had no effect on real estate companies. (2) The phenomenon of financing discrimination was found to exist among listed Chinese companies. Bank credit preference for state-owned enterprises was demonstrated for both the real estate and manufacturing industries. Lastly, (3) when positive expectations regarding real estate market development were not changed, government intervention through monetary policy was ineffective. These findings can provide a reference for real estate market regulation and credit allocation. The government should seek to change overly positive expectations regarding housing prices and strengthen the construction of a prudential regulation system to avoid the systemic financial risks caused by the real estate market. Meanwhile, it is necessary to relax the financing constraints of private enterprises and change the soft budget constraints of state-owned enterprises to eliminate credit discrimination.