Abstract
<abstract> This paper examines the effects and mechanism of the financialization of manufacturing enterprises on total factor productivity (TFP). Thus, it provides evidence of the economic consequences of corporate financialization from the perspective of productivity. Using the panel data of China's listed manufacturing companies from 2007 to 2018, the level of corporate financialization is measured using the proportion of financial assets in the total assets. The results show that the deepening of the financialization of manufacturing enterprises significantly reduces TFP and the magnitude of the impacts of different types of financial assets variates. In addition, the effects of corporate financialization on TFP are heterogeneous in terms of their significance and degrees in different types of enterprises as well as in different levels of enterprises' TFP. The further analysis of the influencing mechanism shows that corporate financialization has different effects on the TFP of manufacturing enterprises through technological innovation and resource allocation efficiency. </abstract>
Highlights
Identifying the relationship between financialization of manufacturing enterprises and total factor productivity (TFP) is an important part of understanding the economic consequences of financialization at the micro-level
We examine the influencing mechanism of the financialization of manufacturing enterprises on TFP from two ways of technological innovation and resource allocation efficiency, which provides an in-depth understanding of the effect of corporate financialization on TFP
In the analysis of the influencing mechanism of corporate financialization on the TFP, we find that financialization has no significant impact on the resource allocation efficiency of manufacturing enterprises, but significantly inhibits the enterprises’ technological innovation
Summary
Identifying the relationship between financialization of manufacturing enterprises and TFP is an important part of understanding the economic consequences of financialization at the micro-level. We use the data of China’s listed manufacturing companies to examine the effect and mechanism of the corporate financialization on TFP, and evaluate the economic consequences from the perspective of productivity. Existing literature mainly focuses on the impact of corporate financialization on the indicators such as industrial investment and profitability, this paper expands the understanding of economic consequences of corporate financialization by examining its effect on TFP. We examine the influencing mechanism of the financialization of manufacturing enterprises on TFP from two ways of technological innovation and resource allocation efficiency, which provides an in-depth understanding of the effect of corporate financialization on TFP. In the analysis of the influencing mechanism of corporate financialization on the TFP, we find that financialization has no significant impact on the resource allocation efficiency of manufacturing enterprises, but significantly inhibits the enterprises’ technological innovation.
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