This paper takes Chinese manufacturing listed firms between 2008 and 2012 as samples to make an empirical test on the effect of institutional environment, key customer’s relational transaction on cash holdings．The study found that the more relational transaction occurred，the more cash suppliers tend to hold to fulfill the commitments to customers and to prevent the risk of losing customers. The motive of the non-state-owned enterprises with lower market position is more obvious；The improvement of regional environment，including the government intervention，the development of the financial services and social integrity can reduce the non-state-owned enterprises’ motivation of cash for important customer’s relational transaction，but the impact is not obvious for state-owned enterprises.