The impact of monetary policy and accessibility of foreign investment to the firm's investment spending: The evidence of Vietnam¹

This study investigated the influence of monetary policy and the accessibility of foreign investment on firms' investment spending using random effect regression. Using comprehensive domestic data that covers 550 listed firms on two stock exchanges, the Ho Chi Minh Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX), between 2017 and 2021, we record three fundamental findings. The findings were monetary policy considerably impacts a firm's investment decisions in that higher interest rates lead to lower levels of investment spending, resulting in a lag effect; the inaccessibility of foreign investment also harms a firm's investment spending, again with a lag effect; and the relationship between monetary policy and a firm's investment profile was influenced by the accessibility of foreign investment. Enterprises that received foreign capital would be able to access more capital sources, so the impact of monetary policy on the investment expenditure of the firm should be more negligible. These results showed that both monetary policy and the accessibility of foreign investment significantly affect a firm's investment spending, and there was an interaction between those two factors.