Analysis of Monetary Policy’s Impact on Corporate Risk-Taking: Evidence from China

Drawing on a sample of Chinese main-board listed firms from 2011 to 2022, this study investigates the association between Monetary policy and corporate risk-taking. Theoretically, we distinctively categorize corporate risk-taking motives as either active or passive, thereby offering a more comprehensive analysis of how monetary policy shapes corporate risk-taking. Empirical research has found a negative correlation between accommodative monetary policy and firms’ risk-taking levels; that is, loose monetary policy reduces corporate risk-taking levels, while the risk-incentive effect was not substantiated. Mechanism tests indicate that accommodative monetary policy reduces corporate risk-taking levels by alleviating financing constraints through the financial channel and lowering default risks, while simultaneously enhancing operational efficiency through the efficiency channel. Heterogeneity analysis based on a moderating effects model indicates that the negative correlation between accommodative monetary policy and risk-taking levels is more pronounced among private enterprises, small and micro enterprises, and high-tech enterprises. This study further enriches the research on the risk-taking channels of monetary policy.It provides empirical evidence for how monetary policy can effectively serve the real economy and alleviate the pressure on firms to bear risks.