Abstract
The real sector (RS) is undergoing a process of corporate financialization. Using the data from Chinese listed firms, this study employs the “Broadband China” policy as a quasi-natural experiment to investigate the financialization impact of broadband upgrade. We find that the “Broadband China” policy significantly reduces RS firms’ financialization. Additionally, with China's broadband upgrade in progress, the relative return on real investment does not increase, implying that the profit-seeking effect is not the driving force behind suppressing corporate financialization. Further analysis suggests that this suppression is likely driven by the upgrade's precautionary savings effect via alleviating corporate financing constraints.
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