Targeted monetary policy and household business credit access: Based on the credit asset pledge relending policy

This paper reveals the impact of targeted monetary policy on household business credit access, emphasizing its implications on entities not explicitly targeted by the policy. The primary goal of the Credit Asset Pledge Relending Policy lies in motivating financial institutions to extend credit to the agricultural sector and small enterprises. However, stringent relending regulations often render loans extended to entities with insufficient financial information ineligible as collateral for further relending. By utilizing data from the China Household Finance Survey, we demonstrate that the Credit Asset Pledge Relending Policy, which is supposed to inject additional liquidity into the market, paradoxically results in a notable reduction in household commercial loans. Based on our heterogeneity analysis, regions with limited capital liquidity and heightened bank competition witness more significant effects on household business loans. Finally, households with an increased aversion to risk or lower financial literacy encounter greater financing constraints in accessing business credit.