Associate Professor Zhang Renbin’s Research Paper Published Online in International Authoritative Finance Journal
Recently, the research paper Monetary policy, intangible capital, and debt contracts by Associate Professor Zhang Renbin from the School of Economics at Shandong University was published online in Journal of Corporate Finance, an international authoritative finance journal. The collaborator of the paper is Assistant Researcher Zhou Weimin from Sichuan University.
With the global economic transformation to knowledge-intensive and service-oriented, intangible assets (such as R&D, software, organizational capital and brand capital) have become increasingly important in the corporate investment structure, and their scale has exceeded tangible capital investment in many countries. However, due to the difficulty of intangible assets as collateral, traditional literature generally believes that enterprises with high intangible assets are difficult to finance through credit channels, and thus are not sensitive to interest rate changes in monetary policy transmission. This paper systematically revises this view and emphasizes the endogenous interaction between intangible assets, debt contract structure and monetary policy transmission.
The core contribution of the paper is to distinguish and compare two types of debt contracts: asset-based lending and cash flow-based lending. This paper points out that although intangible assets lack collateral value, they can significantly improve enterprises' future cash flows, enabling enterprises to obtain financing through cash flow-constrained contracts. Therefore, understanding intangible assets only from the perspective of "insufficient collateral" is easy to ignore their key role in cash flow financing channels. The paper emphasizes that enterprises' choice of cash flow-based or asset-based debt contracts is not exogenously given but endogenously determined by the proportion of intangible assets in enterprises.
In empirical analysis, this paper combines loan contract data from Dealscan with firm-level data from Compustat to investigate the impact of monetary policy tightening shocks on corporate investment. The results show that among cash flow-based borrowing enterprises, the higher the proportion of intangible assets, the more significant the investment contraction caused by monetary policy tightening; among asset-based borrowing enterprises, the proportion of intangible assets does not systematically change enterprises' investment response to monetary policy shocks. This difference is robust in both static regression and dynamic analysis based on local projection method, and is particularly prominent in the dimension of intangible investment.
To explain the above empirical facts, the paper constructs a theoretical model including heterogeneous enterprises, investment portfolio selection (tangible capital and intangible capital) and endogenous choice of debt contracts. The model shows that monetary policy affects the investment scale of a single enterprise not only through the "intensive margin" but also changes the distribution structure of enterprises among different financing and investment strategies through the "extensive margin". Rising interest rates will reduce the relative attractiveness of high intangible investment strategies, making some marginal enterprises withdraw from high intangible investment, thus amplifying the investment decline of high intangible asset enterprises. Overall, this paper reveals an overlooked but increasingly important channel in the modern monetary policy transmission mechanism, namely the co-evolution of intangible capital and debt contract structure.
