Transformations  in
Business & Economics

ASSESSMENT OF UNCERTAINTY OF MONETARY POLICY AND MISALLOCATION OF FINANCIAL RESOURCES⁷
Yichen Liu, Zongyi Yin, Lei Liu

ABSTRACT: Uncertainty of economic policies and misallocation of financial resources are objective phenomena in the market economic system. Scholars pay more attention to the causes and economic consequences of economic policies uncertainty and financial resources misallocation, and few directly study the relationship between the uncertainty of monetary policies misallocation and misallocation of financial resources. To explore the relationship between the uncertainty of monetary policies and misallocation of financial resources, using the financial data of Chinese listed companies in 2011-2020 and a multiple regression model, the effects of uncertainty of monetary policies on enterprise financial resources misallocation and the heterogeneity between different enterprises were empirically tested. Results show that the increased uncertainties of monetary policies increase the degree of misallocation of enterprises' resources and small-scale enterprises. In addition, misallocation of enterprise financial resources caused by the uncertainty of monetary policy decreases enterprise value. Conclusions help the central bank to reasonably adjust the relevant monetary policies, curb the negative influences of the uncertainty of monetary policies by reducing the degree of misallocation of financial resources, and increase the effectiveness and accuracy of monetary policies regulation of the economy.

KEYWORDS:  uncertainty of monetary policy, misallocation of financial resources, enterprise value.

JEL classification:  J20, O11, O31

⁷Acknowledgments:  Acknowledgment: This study was supported by Hubei Province University Philosophy and Social Science Research Project (No. 21Q116).