Does monetary policy affect the stock pledge of listed companies? Evidence from Chinese listed companies
Pubblicato online: 23 dic 2022
Pagine: 1117 - 1132
Ricevuto: 03 nov 2022
Accettato: 19 nov 2022
DOI: https://doi.org/10.2478/amns.2022.1.00031
Parole chiave
© 2022 Junling Liu et al., published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 International License.
In recent years, with the continuous expansion of the scale of equity pledges in China, both the scope and scale of pledges far exceed those of other economies, becoming a unique economic phenomenon in China's capital market [1]. As of the end of 2020, a total of 2,674 listed companies in China's capital market have pledged equity, accounting for 5.90% of the total equity in the A-share market, and the scale of stock pledges was 490,327 million shares, with a total market value of 4.31 trillion yuan (Table 1). With the widespread adoption of stock pledges and the continuous expansion of their influence, scholars in China and abroad have conducted in-depth studies on this topic from different perspectives. While stock pledges ease the financing constraints of majority shareholders [2], due to the controlling position of majority shareholders and the possible risk of control transfer [3], earnings management or market value management behaviour may be exhibited by majority shareholders [4, 5], affecting or interfering with various decisions of listed companies, such as investment and financing [6, 7], R&D and innovation [8] and dividend policy [9]. Unfortunately, these studies mostly examined the motives and economic consequences of equity pledges from the micro (company)-level but failed to investigate the impact of external environmental factors such as macropolicies on the equity pledges of listed companies. Research on the integration of economic policy and company behaviour at the micro-level needs to be conducted. Due to the high concentration of the shareholding structure of listed companies in China and ‘dominant shareholding’ [10], not only can controlling shareholders decide on major matters such as the business plans and financial policies of listed companies through general shareholder meetings but also the board of directors themselves or appointed representatives can indirectly control the board of directors and take control of resources [10] or grant more equity and appoint directorships to implicitly or explicitly related shareholders to achieve an over-allocation of power and further covertly increase control over listed companies [11]. Therefore, the stock pledges of listed companies mainly refer to the stock pledges of majority shareholders.
Stock pledge of listed companies in China from 2014 to 2021.
| 2021.12.31 | 2,517 | 19.6 | 4.87 | 419.827 | 4.18 |
| 2020.12.31 | 2,674 | 24.3 | 5.90 | 490.327 | 4.31 |
| 2019.12.27 | 3,081 | 43.5 | 7.97 | 580.629 | 4.58 |
| 2018.12.28 | 3,434 | 96.8 | 9.76 | 634.512 | 4.23 |
| 2017.12.29 | 3,433 | 252.4 | 10.86 | 568.117 | 6.15 |
| 2016.12.30 | 2,993 | 172.5 | 10.69 | 442.992 | 5.40 |
| 2015.12.31 | 2,774 | 117.8 | 9.30 | 297.83 | 4.93 |
| 2014.12.31 | 2,545 | 51.2 | 6.94 | 216.690 | 2.58 |
Macroeconomic policies are important factors that affect the development of China's real economy, and the impact of macroeconomic policies should be considered when exploring company behaviour at the microlevel [12]. Since the onset of the financial crisis, China's frequent monetary policy adjustments have not only triggered uncertain expectations and aggravated instability in the stock market but also deteriorated the financing environment for enterprises [13]. Majority shareholders that implement stock pledges need a stable stock market to reduce the risk of control transfer, and they also need a good financing environment to improve their cash flow. Under this circumstance, do monetary policy changes affect the stock pledge behaviour of listed companies? If there is an impact, how is this impact achieved? Exploring these issues has important practical significance for the healthy development of China's capital market.
From the perspective of stock pledge financing, this study uses A-share listed companies in the 2011–2020 period as samples to explore the impact of macromonetary policies on equity pledges and its mechanism. Studies have found that monetary policy adjustments significantly affect the stock pledge behaviour of listed companies; that is, a tightening monetary policy increases the stock pledge phenomenon of listed companies, and an expansionary monetary policy reduces the stock pledge phenomenon. Heterogeneity analysis revealed that monetary policy adjustments had a greater impact on the stock pledges of non-state-owned enterprises, enterprises with weak government–enterprise relationship and enterprises without bank–enterprise relationship. Mechanism test results suggest that a quantitative monetary policy only affects the stock pledge behaviour of listed companies through financing costs and that a price-based monetary policy affects the stock pledge behaviour of listed companies through financing costs and the financing scale.
The research contributions of this article are as follows. First, from the macropolicy perspective, the impact of monetary policy adjustments on the stock pledges of listed companies and its mechanism are investigated, enriching the studies on the relationship between macroeconomic policy and microenterprise behaviour. Although a few studies have studied the impact of equity pledges from a macroperspective [14, 15], they have failed to explore the macrodriving factors of equity pledges. This article introduces monetary policy into the research framework of the stock pledge of listed companies, expands the research dimension of stock pledges and deepens the theoretical understanding of stock pledge behaviour. Regarding monetary policy mechanisms, Dickinson & Lin [16] argued that in the complex market environment and with the simultaneous use of quantitative and price-based monetary policies, the monetary policy mechanism is a black box. This study revealed that a quantitative monetary policy only partially affected the stock pledge behaviour of listed companies through financing costs and that a price-based monetary policy partially affected the stock pledge behaviour of listed companies through financing costs and the financing scale. Second, this study distinguishes between different types of property rights, government–enterprise relationships and bank–enterprise relationships and examines the different effects of monetary policies on the stock pledges of listed companies, enriching the literature on equity pledges. Due to the unique institutional background in China, when monetary policies are adjusted, different types of enterprises face different financing constraints and adopt different stock pledge behaviours. This study finds that monetary policy adjustments have a greater impact on the stock pledges of non-state-owned enterprises, enterprises with weak government–enterprise relationship and enterprises without bank–enterprise relations.
Currently, China's economy is experiencing a shift in the speed of development, a challenging period of structural adjustments and a period of rethinking of early-stage stimulus policies. The central bank has repeatedly used quantitative and price-based monetary policy instruments (such as M2 and cash reserve ratio) to intervene in the economy in a discretionary and situation-oriented manner [17]. Currently, the social financing structure in China is dominated by bank credit. Monetary policy adjustments will change the financing environment of enterprises and the financing constraints they face and have a significant impact on the financing behaviour of enterprises (equity). Under normal circumstances, when the central bank implements an expansionary monetary policy, such as increasing the money supply or reducing the cash reserve ratio, the contradiction between the supply and demand of social funds is alleviated, or the transaction costs between enterprises decreases, the financing constraints faced by enterprises decrease and the possibility and scale of their stock pledge financing decrease; conversely, when the central bank tightens the money supply and suppresses economic overheating, the financing constraints faced by enterprises increase and stock pledge behaviour increases.
In addition to credit channels, monetary policies also have an impact on the stock market and indirectly affect enterprise stock pledge behaviour. When the central bank implements an expansionary monetary policy, taking a price-based monetary policy as an example, lowering the benchmark interest rate will drive up the stock price through the asset substitution effect, cost effect and stock pricing effect [18]. Although high stock prices encourage enterprises to implement equity financing or expand the scale of stock pledge financing, frequent monetary policy adjustments increase the volatility of stock prices and earnings [13], which has a certain inhibitory effect on the stock pledge behaviour of enterprises.
Finally, as a signal, once a monetary policy is released, it will affect the expectations of market entities for the future economy and have a significant impact on the investment and financing behaviour of enterprises. Existing studies have shown that frequent monetary policy adjustments are prone to triggering uncertainty expectations [19], which increases the difficulty of forecasting both the supply and demand of funds, making banks more willing to keep credit funds inside the financial system to deal with possible risks, thereby leading to a decrease in credit supply [20] and an increase in stock pledge behaviour. Based on the aforementioned analysis, the following hypothesis is proposed:
Hypothesis 1: Monetary policy adjustments have an important impact on enterprise stock pledges.
The impact of monetary policies on the stock pledge behaviour of majority shareholders may vary with different property rights, bank–enterprise relationship and political connections.
Existing studies have shown that in addition to factors such as information asymmetry [21], property rights are also important factors affecting enterprise financing constraints [22, 23]. As an emerging transitional economy, China's market economy system is not yet mature, and there is a widespread financing discrimination phenomenon in the financial sector [24]. In China, enterprise financing is mainly bank credit, and bank loans have become the main channel of external financing for enterprises. Although the ultimate control of most banks in China is through the government, banks are jointly controlled by the government and state-owned enterprises. Benefiting from the ‘paternal love effect’ of the government, the pre-loan review conditions and loan supervision of state-owned enterprises in the process of obtaining bank loans are relatively weak, and enterprises are often able to obtain bank loans more easily and more preferentially [25]. In addition, the widespread soft budget constraints of state-owned enterprises also reduce the financing needs of state-owned enterprises to some extent [26]. Compared with state-owned enterprises, private enterprises have higher external financing costs and stronger financing constraints due to their shorter operating life, lower transparency and standardisation, fewer available collateral assets and a higher degree of information asymmetry [27]. When the tightening of monetary policy leads to higher external financing constraints, it is more difficult and costly for non-state-owned enterprises than state-owned enterprises to obtain external funds, and the risk of falling into an operational crisis is greater. In this regard, private enterprises often choose stock pledges as an alternative financing option beyond formal financial channels such as banks, stocks and bonds. Wang et al. [3] found that compared with state-owned enterprises, the majority shareholders of private enterprises are more inclined to implement stock pledge financing. These results indicate that property rights affect the external financing capability and stock pledge behaviour of enterprises. Based on the aforementioned analysis, the following hypothesis is proposed:
Hypothesis 2A: The impact of monetary policy on stock pledges of state-owned enterprises is relatively small; it has a greater impact on stock pledges of non-state-owned enterprises.
Existing studies have found that the bank–enterprise relationship formed in long-term cooperation with banks can reduce the information asymmetry in the loan process [28] and has a significant positive impact on an enterprise's access to credit support [29]. In China's financial system, which is dominated by bank credit, the existence of bank–enterprise relationship can increase the probability of enterprises obtaining credit support from banks and reduce the financing constraints brought by external shocks. In this sense, if monetary policies affect the stock pledge of listed companies, then the existence of bank–enterprise relationships will change the relationship between the two. When the monetary policy is tightened, enterprises with bank–enterprise relationships can more easily obtain loans from banks, their financing constraints are eased and the probability and scale of stock pledges decrease; by contrast, enterprises that lack bank–enterprise relationships obtain less credit support from banks. In the face of external shocks, the probability and scale of equity pledges increase. Based on this, the following hypothesis is proposed:
Hypothesis 2B: Monetary policies have a relatively small impact on the stock pledges of enterprises with bank–enterprise relationships; they have a greater impact on the stock pledges of enterprises without bank–enterprise relationships.
Political connections refer to direct or indirect economic interest relationships formed between individuals or social organisations and the government [30]. As a phenomenon, political connections are widespread [31]. They can alleviate enterprise financing constraints through the ‘resource effect’ and ‘information effect’ [26,32] and reduce the stock pledges of listed companies when the monetary policy is tightening. Currently, governments at all levels in China mainly rely on the banking system to promote economic growth, and the phenomenon of commercial banks being interfered with the government still exists. Political connections can make it easier for enterprises to obtain bank credit; the intangible guarantee or credit endorsement brought by political connections to enterprises reduces the debt default risk of enterprises, enabling enterprises to obtain more loans [33]. In addition, political connections can also bring preferential policies such as tax incentives [34] and government subsidies [35] to help enterprises form stronger resource acquisition capabilities [32]. Political connections not only promote the ability of enterprises to obtain commercial credit and ease their financing constraints but also send positive signals to the outside world, thereby making it easier for enterprises to obtain external financial support [36]. Tightening monetary policy will exacerbate the contradiction between capital supply and demand and increase the cost of capital use. From the perspective of financing constraints, enterprises that have established political connections can take advantage of external financing to alleviate financial pressure and reduce the probability and ratio of stock pledges. However, for enterprises without political connections, tightening monetary policy will exacerbate financing constraints and increase the probability and scale of their stock pledges. Based on the aforementioned analysis, the following hypothesis is proposed:
Hypothesis 2C: Monetary policies have a relatively small impact on the stock pledges of enterprises with political connections; they have a greater impact on the stock pledges of enterprises without political connections.
A-share listed companies on the Shanghai and Shenzhen Stock Exchange from 2011 to 2020 are selected as the research sample, with the following excluded: (1) financial and insurance companies, (2) companies with missing relevant data and (3) companies listed for <1 year. After sorting, 19,965 sample datapoints were obtained. Except for the financial institution (FI), the other data were obtained from the CSMAR database, of which the stock pledge data were obtained through manual collation.
To control the influence of outliers, all continuous variables were treated with 1% winsorisation.
In this study, two variables are used to measure the stock pledges of listed companies. PLD represents whether majority shareholder stock pledge behaviour is present in a listed company. If there is a majority shareholder stock pledge balance at the end of the year, the PLD value is 1; otherwise, the value is 0. PLR represents the scale of the stock pledge of the majority shareholders of a listed company, that is, the ratio of the number of stock pledges by majority shareholders to the number of shares held by them at the end of the year.
Quantitative indicators and price indicators are used to measure monetary policy. Quantitative indicators mainly include monetary base, excess reserve, narrow money supply M1, broad money supply M2 and credit scale; price indicators mainly include the cash reserve ratio, treasury bond interest rate and interbank lending rate.
Taking into account China's monetary policy in recent years and with reference to Qian et al. [37] and Wang et al. [38], the quantitative indicator of monetary policy in this study is expressed as the year-on-year growth rate of broad money supply M2, and the price indicator is the required reserve ratio (Rrr). The M2 growth rate of broad money supply M2 was obtained from the Wind information database, and the Rrr was obtained from the website of the People's Bank of China.
In terms of property rights (firm), in this study, the listed companies are divided into state-owned enterprises and non-state-owned enterprises according to the types of actual controllers in the CSMAR database: when the actual controller is a state-owned enterprise, the property rights value for the enterprise is set to 1; otherwise, it is 0. In terms of bank–enterprise relationships (bank), this study references Degryse & Cayseele [39] and Zhang et al. [36] and uses the long-term debt relationships between enterprises and banks to measure the bank–enterprise relationship. If an enterprise has long-term bank debt, the value of the enterprise relationship is 1; otherwise, it is 0. In terms of political connections, with reference to Faccio [31], Yu Minggui and Pan Hongbo [40], the political identity of enterprise executives is used as a measure of political relevance. When the chairperson or general manager of an enterprise is (1) a current or former National People's Congress (NPC) deputy, (2) current or former government official, or (3) current or former Chinese People's Political Consultative Conference (CPPCC) member, the enterprise has political connections, and the value is 1; otherwise, the value is 0. These data were obtained from the CSMAR database.
The control variables used in this study include enterprise characteristics and regional characteristics. Enterprise characteristics include enterprise size (size), natural logarithm of enterprise total assets; return on assets (Roa), rate of return on total assets; risk indicator (Lev), enterprise asset-liability ratio; growth indicator (Growth), enterprise main business growth rate; cash flow ratio (Cash), the proportion of cash and cash equivalents in total assets; enterprise age (Age); and shareholder structure (Top1), the proportion of shares held by the largest shareholder. Regional characteristics include gross domestic product (GDP) growth rate, consumer price index (CPI) and FI. The GDP growth rate and CPI index data were obtained from the website of the National Bureau of Statistics. The FI data were obtained from the
Major variable definition and its calculation.
| Explained variables | Dummy variable of major shareholder stock pledge | If there is major shareholder stock pledge at the end of the year, PLD equals to 1; otherwise it is 0 | |
| The proportion of major shareholder stock pledge | The ratio of pledged stocks to the whole stocks owned by major shareholders at the end of the year | ||
| Explanatory variable | Quantitative monetary policy | The growth rate of M2 yearly | |
| Price monetary policy | Statutory reserve ratio | ||
| Control variable | Enterprise size | Natural logarithm of corporate total assets | |
| Profit index | Net profit/total assets at the end of the year | ||
| Risk index | Total liability/total assets | ||
| Growth index | Current sales revenue/previous sales revenue-1 | ||
| Cash flow ratio | Cash and cash equivalents at the end of the period/total assets | ||
| Equity structure | The shareholding ratio of the largest shareholder | ||
| GDP growth | Regional GDP growth (by province) | ||
| CPI | Regional CPI (by province) | ||
| Financial index | Regional financial index constructed as H.H Yu et al. (2010) |
CPI, consumer price index; GDP, gross domestic product.
To test the impact of macromonetary policies on the stock pledges of listed companies, the following regression model is established:
Here,
Table 3 provides the descriptive statistics of the main variables. The average PLD value for whether or not to pledge stock is 0.671, indicating that 67.1% of the sample is stock pledged by majority shareholders. The average PLR of the stock pledge size is 0.603, indicating that the average stock pledge ratio of the majority shareholders is 60.3%; the maximum value is 1, the minimum value is 0 and the standard deviation is 0.373, indicating that there is a large difference in the scale of stock pledges by majority shareholders of different listed companies. The mean value for quantitative monetary policy M2 is 0.1076 (range, 0.081–0.1732), indicating that China's monetary policy has relatively large fluctuations; compared with that for the quantitative monetary policy, the fluctuation range for China's price-based monetary policy is relatively small, between 0.125 and 0.205.
Main variable descriptions.
| PLD | 19,965 | 0.6710 | 0.4698 | 0 | 1 |
| PLR | 19,965 | 0.6032 | 0.3732 | 0 | 1 |
| M2 | 19,965 | 0.1076 | 0.0290 | 0.081 | 0.1732 |
| Rrr | 19,965 | 0.1656 | 0.0248 | 0.125 | 0.205 |
| Size | 19,965 | 21.8787 | 1.1448 | 17.3882 | 28.0554 |
| Roa | 19,965 | 0.0283 | 0.1182 | −4.9465 | 8.2772 |
| Lev | 19,965 | 0.4018 | 0.2026 | 0.0080 | 3.9191 |
| Growth | 19,965 | 1.9391 | 149.0272 | −1.3092 | 14,883.06 |
| Cash | 19,965 | 0.1881 | 0.2995 | −0.02092 | 11.9338 |
| Top1 | 19,965 | 29.1268 | 12.8843 | 2.197 | 89.99 |
| Age | 19,965 | 2.0663 | 0.7713 | 0 | 3.7136 |
| GDP | 19,965 | 0.0702 | 0.0218 | −0.05 | 0.164 |
| CPI | 19,965 | 0.0224 | 0.0075 | 0.005667 | 0.06334 |
| FI | 19,965 | 8.9723 | 3.3710 | −1.21 | 20.69 |
CPI, consumer price index; FI, financial institution; GDP, gross domestic product.
Table 4 provides the results for the analysis of the relationship between macromonetary policies and the stock pledges of listed companies. Columns (1) and (2) show the impact of a quantitative monetary policy on the stock pledges of listed companies, and columns (2) and (4) show the impact of a price-based monetary policy on the stock pledges of listed companies. As seen in columns (1) and (3), the M2 coefficients are both negative and significantly negative at the 1% level, indicating that when the central bank injects liquidity into the market through additional currency issuance and open market operations, an expansionary monetary policy will significantly reduce the stock pledges of listed companies. As seen in columns (2) and (4), the Rrr coefficient is significantly positive at the 1% level, indicating that for every 1 unit increase in the statutory cash reserve ratio of the central bank, the stock pledge of the listed company will increase by 1.444 units. This indicates that a price-based monetary policy will significantly increase the stock pledge of listed companies. Compared with the M2 coefficient, the Rrr coefficient has a larger absolute value, indicating that a price-based monetary policy has a more significant impact than a quantitative monetary policy on the stock pledges of listed companies. The results in Table 4 indicate that macromonetary policies significantly affect the stock pledges of listed companies. Hypothesis 1 is verified.
Monetary policy and stock pledge.
| M2 | −1.252*** | −0.704*** | ||
| (−9.36) | (−7.71) | |||
| Rrr | 1.091*** | 1.444*** | ||
| (8.53) | (10.07) | |||
| Firm characteristics | Control | Control | Control | Control |
| Regional characteristics | Control | Control | Control | Control |
| Constant | 0.875*** | 0.992*** | 0.682*** | 0.296*** |
| (10.47) | (11.11) | (11.92) | (4.86) | |
| 19,965 | 19,965 | 19,965 | 19,965 | |
| Adj- |
0.023 | 0.022 | 0.115 | 0.116 |
represent significance at 1% level,
Because China's economy and society are in the process of transition, the market economy system is not mature, and there is relatively serious credit discrimination in the financial field. Compared with state-owned enterprises that enjoy preferential financing treatment, private enterprises left out of the formal financial system not only have greater difficulty in financing but also face higher financing costs and higher external financing constraints. As an alternative to traditional financing channels, stock pledges are favoured by private enterprises because of their fast financing, high liquidity and strong cashability. When the external monetary policy tightens, the financing situation of private enterprises becomes more severe, and they are more inclined to pledge stocks to alleviate financing pressure. Table 5 reports the degree of response of enterprises with different property rights to the monetary policy Unless otherwise specified, PLR is used as the explanatory variable in the following?
Monetary policy and stock pledge with different properties.
| M2 | −0.641*** | −0.579*** | ||
| (−6.87) | (−1.80) | |||
| Rrr | 1.635*** | 0.114 | ||
| (11.12) | (0.24) | |||
| Firm characteristics | Control | Control | Control | Control |
| Regional characteristics | Control | Control | Control | Control |
| Constant | 0.502*** | 0.0857 | 1.141*** | 1.019*** |
| (8.45) | (1.36) | (6.32) | (5.11) | |
| 19,004 | 19,004 | 961 | 961 | |
| Adj- |
0.135 | 0.138 | 0.059 | 0.056 |
represent significance at 1% level, t-statistics are reported within parentheses.
When an enterprise and a bank form a bank–enterprise relationship based on long-term cooperation, the degree of information asymmetry between the two decreases, the probability of the enterprise obtaining credit support from the bank increases and the enterprise does not need to hold too much cash for emergency needs. As a substitute for enterprise cash assets [41], the existence of a bank–enterprise relationship affects enterprise stock pledge behaviour under monetary policy changes. Table 6 reports the degree to which the stock pledges of different bank–enterprise relationships reflect monetary policies. Columns (1) and (3) and columns (2) and (4) report the stock pledges of different bank–enterprise relationships under quantitative and price-based monetary policies, respectively. When the central bank implements an expansionary monetary policy, the financing constraints of enterprises decrease and the scale of stock pledges decreases. Compared with that of enterprises without bank–enterprise relationships, the scale of stock pledges of enterprises with bank–enterprise relationships decreases more. When the central bank increases the cash reserve ratio to implement a tightening monetary policy, the scale of the stock pledges of enterprises with bank–enterprise relationships is relatively small. The results in Table 6 show that the impact of monetary policies on stock pledges is affected by the bank–enterprise relationship. Hypothesis 2B is verified.
Monetary policy and stock pledge with different bank–enterprise relationships.
| M2 | −0.710*** | −0.726*** | ||
| (−5.77) | (−5.44) | |||
| Rrr | 1.533*** | 1.181*** | ||
| (8.00) | (5.56) | |||
| Firm characteristics | Control | Control | Control | Control |
| Regional characteristics | Control | Control | Control | Control |
| Constant | 0.642*** | 0.311*** | 0.713*** | 0.323*** |
| (7.57) | (3.44) | (9.30) | (3.97) | |
| 11,128 | 11,128 | 8,837 | 8,837 | |
| Adj- |
0.118 | 0.118 | 0.113 | 0.115 |
Existing studies have shown that good political connections help enterprises increase their ability to obtain resources, help them obtain loans from banks and alleviate financial pressures caused by external shocks. It can be expected that when a monetary policy is tightened, the financing constraints of nonpolitically connected enterprises will become tighter and that their stock pledge probability and scale will increase. Table 7 reports the degree of reaction of different enterprises with political connections to monetary policies. Columns (1) and (3) and columns (2) and (4), respectively, report the stock pledges of enterprises with or without political connections under quantitative and price-based monetary policies. When the central bank issues additional currency to implement an expansionary monetary policy, compared with that of enterprises with political connections, the scale of the stock pledges of enterprises without political connections decrease to a larger extent; when the central bank increases the statutory cash reserve ratio to implement a tightening monetary policy, the scale of the stock pledges of enterprises without political connections increases significantly. The results in Table 7 suggest that the impact of monetary policies on stock pledges is affected by political connections. Hypothesis 2C is validated.
Monetary policy and stock pledge with different political connections.
| M2 | −0.705*** | −0.659*** | ||
| (−3.67) | (−6.89) | |||
| Rrr | 2.084*** | 1.384*** | ||
| (8.04) | (7.72) | |||
| Firm characteristics | Control | Control | Control | Control |
| Regional characteristics | Control | Control | Control | Control |
| Constant | 0.832*** | 0.438*** | 0.617*** | 0.148* |
| (9.37) | (4.64) | (8.05) | (1.79) | |
| 13,947 | 13,947 | 6,018 | 6,018 | |
| Adj- |
0.151 | 0.158 | 0.091 | 0.092 |
To alleviate the reverse causality problem, the main explanatory variables and the control variables at the company level and at the regional level are treated with a one-period lag. The regression results are shown in column (1) in Table 8. The results indicate that the conclusion is still valid.
Substitution variable method: Based on the approach described by Zhang et al. [42] for the monetary policy stance, when the year-on-year growth rate of M2 is higher than the sample median, the value of the substitution explanatory variable (M2) is 1; otherwise, it is 0. Additionally, the ratio of the stock equity of the majority shareholders at the end of the year to the total shares of the listed company replaces the explained variable (PLR). The regression results are shown in column (2) of Table 8. The results indicate that the conclusion is still valid.
Reduced sample size method: In this study, only listed manufacturing companies are selected as the research objects. The regression results are shown in column (3) in Table 8. The results indicate that the conclusion is still valid.
PSM: Considering the difference between listed companies that have stock pledges and listed companies that have not implemented stock pledges, PSM is employed, thus alleviating this problem. With reference to Zhang et al. (2020), we selected indicators such as total assets, nature of equity, shareholding ratio of majority shareholders and return on total assets to match stock pledges and obtained 10,452 control samples. The regression results are shown in column (4) in Table 8. The results indicate that the conclusion is still valid.
Heckman two-stage regression: Considering the possible endogeneity between macromonetary policies and stock pledges, Heckman two-stage estimation is used to mitigate the possible impact of the endogeneity problem. The dependent variable of the first-stage profit regression is whether the listed company has a stock pledge, that is, PLD, and the internal control index of enterprises with stock pledges is added to obtain the inverse Mills ratio (IMR). The IMR is then included in the model for second-stage regression. The results are shown in column (5) of Table 8. As seen in this column, the IMR coefficient is not significant, indicating that there is no obvious self-selection problem in the sample.
Endogenesis and robustness test.
| M2 | −1.035*** | ||||
| (−10.98) | |||||
| Rrr | 0.907*** | 1.404*** | 0.896*** | 1.224*** | |
| (6.98) | (7.95) | (7.95) | (7.65) | ||
| IMR | 0.062 | ||||
| (0.256) | |||||
| Firm characteristics | Control | Control | Control | Control | Control |
| Regional characteristics | Control | Control | Control | Control | Control |
| Constant | −0.176*** | −0.046*** | 0.216*** | 0.226*** | 0.242*** |
| (−2.73) | (−2.63) | (3.34) | (3.38) | (3.32) | |
| 19,965 | 19,965 | 13,739 | 10,452 | 13,739 | |
| Adj- |
0.245 | 0.210 | 0.186 | 0.324 | 0.224 |
IMR, inverse Mills ratio.
This study examines the mechanism of action of monetary policies on the stock pledges of listed companies from the two dimensions: financing scale and financing costs.
(1) Financing scale: In this study, the ratio of interest-bearing liabilities to total assets at the end of the period is used to measure the financing scale of listed companies, where interest-bearing liabilities = short-term loans + long-term liabilities due within 1 year + bonds payable + long-term loans. (2) Financing cost: This study uses the ratio of the interest expense at the end of the period to the interest-bearing liabilities to measure the financing costs of listed companies.
In this study, the mediating effect analysis method described by Baron & Kenny [43] and Yang et al. [13] is used and is conducted in three steps. The first step involves examining the relationship between monetary policies and stock pledges and obtaining the regression coefficient
In Table 9, panel A provides the test results for financing scale FV as the mediating variable, and panel B provides the test results for financing cost FC as the mediating variable. As seen in panel A column (4), the Rrr coefficient is 1.420, which is significantly positive at the 1% level, indicating that a price-based monetary policy is positively correlated with the stock pledges of listed companies; as seen in column (5), the Rrr coefficient is 0.332, which is significantly positive at the 1% level. This indicates that a tightening monetary policy will increase the contradiction between the supply and demand of funds in the market and that the demand for financing will be strong. Therefore, a price-based monetary policy is positively correlated with the scale of enterprise financing; after adding variable FV (column 6), the coefficient of Rrr changes from 1.420 to 1.349, which is significantly positive at the 1% level, and the Sobel Z value is 0.090, which is significant at the 1% level, indicating that there is a partial intermediary effect; that is, when the central bank implements a tightening monetary policy by increasing the statutory reserve ratio, market financing demand and scale will increase, prompting more listed companies to exhibit stock pledge behaviour. In panel B, the absolute values in columns (3)/(6) are smaller than those in columns (1)/(4) and are significant at the 1% level, indicating that there is a partial mediating effect; that is, with a quantity-based monetary policy or a price-based policy, a tightening monetary policy will increase enterprise financing costs and increase the stock pledge behaviour of listed companies.
Mediating effect test.
| M2 | −0.853*** | 0.025 | −0.859*** | |||
| (−8.76) | (0.82) | (−8.84) | ||||
| FV | 0.227*** | 0.215*** | ||||
| (9.54) | (9.02) | |||||
| Rrr | 1.420*** | 0.332*** | 1.349*** | |||
| (9.26) | (6.89) | (8.81) | ||||
| Firm characteristics | Control | Control | Control | Control | Control | Control |
| Regional characteristics | Control | Control | Control | Control | Control | Control |
| Constant | 0.720*** | −0.320*** | 0.793*** | 0.305*** | −0.377*** | 0.386*** |
| (11.78) | (−16.65) | (12.90) | (4.68) | (−18.44) | (5.88) | |
| 17,775 | 17,775 | 17,775 | 17,775 | 17,775 | 17,775 | |
| Adj. |
0.113 | 0.440 | 0.117 | 0.113 | 0.441 | 0.117 |
| 226.01*** | 1,380.22*** | 215.24*** | 228.38*** | 1,392.90*** | 215.85*** | |
| Sobel Z | 0.022** | 0.090*** | ||||
| M2 | −0.853*** | −0.231** | −0.847*** | |||
| (−8.76) | (−2.08) | (−8.70) | ||||
| FC | 0.027*** | 0.029*** | ||||
| (4.15) | (4.42) | |||||
| Rrr | 1.420*** | −0.328* | 1.320*** | |||
| (9.26) | (−1.88) | (9.33) | ||||
| Firm characteristics | Control | Control | Control | Control | Control | Control |
| Regional characteristics | Control | Control | Control | Control | Control | Control |
| Constant | 0.720*** | 0.248*** | 0.713*** | 0.305*** | 0.268*** | 0.297*** |
| (11.78) | (3.55) | (11.67) | (4.68) | (3.60) | (4.56) | |
| 17,775 | 17,775 | 17,775 | 17,775 | 17,775 | 17,775 | |
| Adj. |
0.113 | 0.073 | 0.114 | 0.113 | 0.073 | 0.114 |
| 226.01*** | 1,018.26*** | 206.46*** | 228.38*** | 1,139.27*** | 213.73*** | |
| Sobel Z | 0.001* | 0.093*** | ||||
Uncertainty in economic policies is an important risk that enterprises must face. Stock pledge financing has become an important measure for enterprises to cope with monetary policy adjustments. This study analyses the impact of monetary policy adjustments on the stock pledges of listed companies and its mechanism. Based on the data of listed companies from 2011 to 2020, the results of this study indicate that monetary policy adjustments significantly affect the stock pledge behaviour of listed companies; that is, a tightening monetary policy will increase the stock pledge phenomenon in listed companies and that an expansionary monetary policy will reduce the stock pledge phenomenon. Further analysis revealed that monetary policies have a greater impact on the stock pledges of non-state-owned enterprises, enterprises with weak government–enterprise relationship and enterprises without bank–enterprise relationships. The mechanism test results indicate that a quantitative monetary policy only affects the stock pledge behaviour of listed companies through financing costs and that a price-based monetary policy affects the stock pledge behaviour of listed companies through financing costs and the financing scale.
The results from this study have the following practical significance. Firstly, the counter-cyclical regulation measures adopted by the central bank may fail to achieve the expected goals due to the hedging operations of microenterprises. Therefore, to improve the effectiveness and pertinence of macropolicies, it is necessary for relevant government departments to adopt joint measures. Additionally, monetary policy adjustments must improve transparency and alleviate uncertainty for market participants, thereby promoting the long-term stable development of the real economy under the guidance of macroeconomic policies. Secondly, listed companies must improve their financing structure, expand financing and improve their ability to respond to external shocks.
There are some research limitations to this study such as the failure to distinguish between the entities that implement stock pledges (majority shareholders, institutional investors, etc.) and listed companies. We also do not further explore the impact of stock pledges, such as whether they trigger systemic financial risks. These issues should be addressed in future studies.