This paper investigates how a firm＇s characteristics restrict the influence of monetary policy changes on its investment behavior. Focusing on China＇s listed companies for a sample period from the first quarter of 2002 to the first quarter of 2011, we find that quantity- oriented and price-based monetary policies have heterogeneous impacts on corporate investment behavior, but the influence of monetary policies is constrained by the liquidity, inventory, size and asset-liability ratio of a firm. Firms with higher liquidity, lower inventory level and lower asset-liability ratios are less sensitive to the impact from two kinds of monetary policies. The larger the size of the firm, the less it is subject to influenee from quantity-oriented monetary policy; it responds more to price-based monetary poliey. The policy implication is that the monetary authorities should pay attention to the importance of policy-making based on the monetary demand of mieroeconomie entities.
