Abstract: Companies may allocate their trading financial assets for speculative purpose or capital reserve purpose. To identify the two purposes, this paper makes a research into the relationships between monetary policies, stock market cycles and companies' trading financial asset allocations, and impacts on companies' investment behaviors. The results show that:when monetary policy tends to be loose, companies will significantly improve the levels of trading financial asset allocations, and private companies' holding level of trading financial assets are significantly affected by monetary policy changes. However, there is no significant difference in the allocation level of trading financial assets when a company is involved in different stock market cycles. Further results also prove that trading financial asset allocations significantly help private companies reduce the investment cash flow sensitivity, ease the lack of investment, and effectively improve the continuity of R&D expenses, so as to ease their financing constraints. The empirical results of this paper not only confirm the capital reservation motivations of companies' trading financial asset allocations, and further expand the transmission mechanism of monetary policies impacting on the micro companies' investment and financing behaviors, but also, from the perspective of companies' financial asset allocation behaviors, explain potential reasons for monetary policies' poor regulatory effects.

Key words: monetary policies, financial asset allocations, capital reserve purpose, speculative purpose, financing constraints