Abstract: Taking all the private enterprises listed in Shanghai and Shenzhen stock markets from 2007 to 2014 as the research samples and combining the two aspects of government-enterprise relationship and bank-enterprise relationship, this paper verifies the impact of enterprise social capital on financial flexibility reserve decisions. The results show that the level of enterprise’s financial flexibility is negatively correlated with the bank-enterprise relationship or the government-enterprise relationship, i.e., the enterprise with higher level of the relationship of banks-enterprise or government-enterprise would tend to reserve lower level of financial flexibility, and vice versa. Further research finds out that when the monetary policy is tightened, the banks-enterprise relationship or government-enterprise relationship will have a more significant negative impact on the financial flexibility.

Key words: bank-enterprise relationship; government-enterprise relationship; financial flexibility; monetary policy