Abstract
China's economy has been slowing down over the past decade since 2007, with real investment posting obviously sluggish growth, in contrast to a rising trend of financialization in non-financial firms. Using firm-level panel data, this paper examines the impacts of firms' financialization on real investment in China with an extended portfolio choice model. Empirical results show that firms' financialization has an economically and statistically significant reducing effect on their real investment. Unlike the existing literature, however, we find that the return gap between real and financial investments plays a limited role in affecting real investment.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
