Financialization Of Enterprises Research Articles

Effect of big data on enterprise financialization: Evidence from China's SMEs

China's advancement in big data technology is poised to resolve the dilemma of the “shift from real to virtual” for enterprises and foster a virtuous economic and financial cycle. This study concentrates on China's small and medium enterprises (SMEs) to explore the economic impact of big data on enterprise financialization. The findings indicate that big data significantly reduces the dependency on financial asset allocation and mitigates the inclination toward financialization. These effects are more pronounced in enterprises facing financing constraints, in the maturity stage, and in highly competitive industries. Further mechanism analysis suggests that resource crowding-out, governance change, and risk diversification are important micro-mechanisms through which big data inhibits the financialization of enterprises. This study theoretically enriches the research on enterprise digital transformation and deepens the internal logical links between big data technology and enterprise economic behavior. It also provides empirical evidence and policy implications for preventing the potential risks of industrial “hollowing out” and promoting a virtuous economic and financial order cycle.

Does controlling shareholders' share pledge exacerbate excessive financialization of enterprises?-Evidence from performance pressure perspective.

Based on the perspective of performance pressure, we explore the influence of controlling shareholders' share pledge on excessive financialization behavior of enterprises and its internal mechanism. The results show that the share pledge of controlling shareholders is positively correlated with the excessive financialization behavior of enterprises. After the controlling shareholder's share pledge, the actual performance of the enterprise is lower than expected, causing the short-sighted behavior of the management, which makes the management willing to conspire with the controlling shareholder to cause the excessive financialization of the enterprise. The results are especially evident among the uncertainty of economic policy is low, the industry competition is not fierce and the executives have overseas experience.

Can Digital Transformation Of Enterprises Curb Excessive Financialization

Along with the slowdown of domestic economic growth, excessive financialization of enterprises has become increasingly common. Whether digital transformation, as a new driving force for the development of the real economy, can curb the excessive financialization of enterprises remains to be tested. This paper explores the impact of corporate digital transformation on corporate over-financialization and its mechanism of action, taking Shanghai and Shenzhen A-share listed companies from 2011-2021 as the research object. It is found that the digital transformation of enterprises can suppress excessive financialization, and financing constraints play a mediating role in the digital transformation of enterprises to hide excessive financialization. Further research shows that the higher the level of financialization, the more they are affected by the inhibiting effect of corporate digital transformation. This paper provides strong evidence for the controversy over the impact of corporate digital change on excessive financialization. It provides an important reference for companies to actively embrace digital transformation and de-financialize and for governments to continue to promote the deep integration of the digital economy with the real economy.

Do Selective Industrial Policies Reduce the Tendency of Enterprises to Economic “Off real to virtual”--Evidence based on the qualification of high-tech enterprises

The accreditation of high-tech enterprises is an important policy which is put forward by the state to support and encourage the development of high-tech enterprises. This paper takes the policy of high-tech enterprises accreditation as the research object, adopts the staggered difference in differences (DID) research method, and based on the relevant data of A-share listed companies from 2007 to 2021 to explores the relationship between the selective industrial policies and the tendency of enterprises to economic “off real to virtual”. The economic “off real to virtual” of enterprises is manifested in the rise of the financial level of enterprises. When an enterprise holds too much financial assets, it has a crowding out effect on its main business and brings certain negative impacts on the enterprise and the economy, which is not conducive to the development and smooth operation of the industry and the national real economy. The results show that the policy of high enterprise accreditation significantly inhibits the level of financialization of enterprises, and the degree of influence on the level of enterprise financialization is related to the property nature of enterprises, the size of enterprises and other characteristics. On this basis, the degree of influence is discussed in groups according to the liquidity difference of financial assets. From the perspective of influence mechanism, the policy of high-tech enterprise accreditation mainly reduces the degree of enterprise financialization from the aspect of tax relief.

Impact of digital finance on the asset allocation of small- and medium-sized enterprises in China: Mediating role of financing constraints

Digital finance has provided informal financial support to small- and medium-sized enterprises (SMEs) and solved the dilemma of acquiring formal financial support in emerging economies such as China. However, this may lead to structural changes in entity enterprises’ asset allocations. Based on SMEs listed on the Shenzhen Stock Exchange: Small and Medium Enterprise Board from 2011 to 2018, this study empirically examines the underlying mechanism of digital finance on the asset allocation behaviors of SMEs. The results show that digital finance enables SMEs to allocate more financial assets, thus intensifying the level of financialization of asset allocation. Furthermore, financing constraints partially mediate the relationship between digital finance and the financialization of asset allocation. Further, we investigate financialization motivation in particular and find that the impact of digital finance on the financialization of enterprises is more significant in enterprises with more investment opportunities and in areas with a speculative atmosphere. The results support that SMEs’ financial asset investment has an investment substitution motive rather than a reservoir effect. Digital finance relieves SMEs’ financing constraints and reduces their financing costs. When financing constraints are alleviated, digital finance also prevents the tendency of financialization in SMEs’ asset allocation. This study offers useful policy implications for preventing SMEs’ investment distortions in the development of digital finance.

Supply chain concentration and enterprise financialization: Evidence from listed companies in China's manufacturing industry.

Enterprise financialization will block the equipment update and technological innovation of enterprises by crowding out the main business funds. The risks and benefits of supply chain concentration will affect the enterprise financialization. This paper selects the panel data of A-share listed companies in China from 2009 to 2021, and uses fixed effect regression to analyze the impact of supply chain concentration on enterprise financialization. The conclusions show: both suppliers and customers concentration significantly promote the financialization of enterprises, and this conclusion is still valid after a series of tests; This kind of financialization effect is heterogeneous in four aspects: the nature of property rights, the scale of enterprises, the intensity of industrial competition and the level of economic development in the region where the enterprises are located; the mechanism analysis show that customer concentration can affect enterprise financialization through upstream commercial credit, but supplier concentration cannot affect enterprise financialization through downstream commercial credit.

Enterprise Financialization and Technological Innovation: An Empirical Study Based on A-Share Listed Companies Quoted on Shanghai and Shenzhen Stock Exchange

In recent years, the growth rate of China’s real industry has slowed down while the financial industry has entered a phase of rapid development. Driven by the profit-seeking motive of capital, real enterprises tend to carry out financial investments, and the degree of corporate financialization has been rising. This paper selects A-share listed enterprises in Shanghai and Shenzhen from 2009 to 2020 as research samples to study the impact of corporate financialization on technological innovation and the mediating effect of financing constraints from the perspective of financial asset holding. The study found that the financialization of enterprises’ crowding out effect on technological innovation has led to the phenomenon of “turning from real to virtual”. We also found that the crowding-out effect had experienced lag. This conclusion still held when we controlled for endogeneity. The heterogeneity analysis showed that the financialization of non-state-owned enterprises had an excessive inhibitory effect on technological innovation, and the financialization of enterprises in eastern China has had a remarkable inhibitory effect on technological innovation. The influence mechanism analysis showed how financing constraints played a crucial mediating role in corporate financialization inhibiting technological innovation, and corporate financialization has inhibited technological innovation by exacerbating financing constraints. Based on this research, we propose targeted suggestions to prevent the excessive financialization of enterprises on both government and enterprise levels.

Managerial Competence and Corporate Financialization

Along with the downward pressure of domestic and foreign economies, some real enterprises deviate from their main business to allocate financial assets, and the funds flowing to the real economy sector keep decreasing, which to some extent crowds out the enterprises' investment in their main business and may lead to the financialization of enterprises. This paper incorporates managerial competence under the rationality hypothesis into the analytical framework and examines the impact of managerial competence traits on corporate financialization using Shanghai and Shenzhen A-share listed companies from 2010 to 2020 as the research sample. It is found that managerial competence significantly promotes corporate financialization, mainly in terms of increasing short-term financial asset allocation, which provides some reference and reference for real enterprises to make reasonable investment decisions.

The Digital Inclusive Finance and Investment Efficiency of Enterprises: Evidence from Perspective of Financialization

Digital inclusive finance, a byproduct of traditional banking and digital technology, has a substantial effect on the financial standing of businesses. Using information from Chinese A-share listed firms between 2011 and 2018, this paper empirically investigates the connection between the emergence of digital financial inclusion and investment efficiency and financialization of real enterprises, as well as their underlying mechanisms. The results show that digital financial inclusion rises a suppressive effect on the investment efficiency of enterprises. Further, this effect is influenced by other control factors. The mechanism test shows that digital financial inclusion enhances the process of financialization of corporations. Findings of this paper help clarify the mechanism of the role of digital inclusive finance. Based on the empirical findings, this paper recommends controlling the unrestricted promotion of digital inclusive finance but encouraging balanced expand.

Financializing Africa’s urban peripheries: the rise of housing microfinance

ABSTRACT Housing microfinance is transforming Africa’s urban peripheries. While many actors, factors, and processes are driving the financialization of peripheral urban Africa, social enterprises and fintech (financial technology) play a key role in making these spaces the “new real estate frontier”. At the same time, efforts to promote financial inclusion are hampered by longstanding challenges related to informality and state bureaucracy that are becoming important sites of regulatory reform and political contestation. The rise of housing micro-finance in urban Africa poses important questions and calls for more critical geographical research. In this piece, I highlight three themes that deserve particular attention: models and impacts, informality and fintech, and restructuring of states and urban governance.

Big Data, Financial Digitalization and Enterprises’ Shift from Real to Virtual

Technological advancements, for instance, big data, mathematical modeling, the Internet of Things, blockchain, and cloud algorithms, have made inclusive finance more feasible. In order to cope with future uncertainties and reduce operational risks, enterprises might increase the proportion of financial assets. Finance, real estate, and other industries have become more and more important to enterprises in recent years. The aim of this paper is to examine how the progress in digital finance has enabled businesses to become more "financial" and to formulate the following policies. The model used in this paper researched how financial digitization affects the degree of financialization of firms. Digital technology has significantly contributed to the financialization of enterprises based on experimental results. A shift from real to virtual economy may result from more real enterprises participating in financial investment or financial business. Based on the model above, dummy variables and their interaction terms are introduced, which shows digitalization level has no heterogeneous effect on the degree of financialization in large and small enterprises. The study discovered that developing digital finance has a favourable impact on how financial assets are allocated by businesses (regardless of size). Due to the financialization of these businesses, financial markets have surely grown more competitive, putting pressure on all participants, and presenting opportunities and threats.

The impact of idiosyncratic risk on corporate financialisation——Evidence from China

Using the quarterly data of non-financial companies listed on China's A-share market from 2007 to 2019, this paper examines the relationship between the idiosyncratic risk formed based on the secondary market exchanges and the corporate financialization from the perspective of a market feedback effect. The empirical results show that idiosyncratic risk has a significant impact on the allocation of financial assets of non-financial enterprises, which is one of the motivating factors for the financialization of non-financial enterprises. Compared with SOEs, large enterprises and non-manufacturing enterprises; private enterprises, small and medium-sized enterprises, and manufacturing enterprises will allocate more financial assets when idiosyncratic risk increases. Mechanism analysis shows that managers risk aversion and financing constraints increase the impact of idiosyncratic risk on financial asset allocation while strengthening the external monitoring mechanism of institutional investors has the opposite effect. The research findings of this paper help to understand whether secondary financial markets affect the financial investment decisions of real firms in transition economies, and also have implications for how to govern the “transition from real to virtual” of real enterprises in China.

The impact of the "Belt and Road" initiative on the financialization of enterprises

In this paper, the implementation of the "Belt and Road" initiative is taken as a quasi-natural experiment under the background of the economy "moving from real to virtual". Using the data of Shanghai and Shenzhen stock markets from 2009 to 2020, this paper examines the impact of the Belt and Road Initiative on corporate financialization through the DID model, and conducts the corresponding robustness test. Findings: The Belt and Road Initiative significantly inhibits the financialization level of the target enterprises. Further research shows that the inhibition effect is more obvious in non-state-owned enterprises and enterprises with weak market competitiveness. The research in this paper shows that the "Belt and Road" Initiative plays an important role in guiding real enterprises to "get rid of virtual and return to real", and the research conclusion provides a new perspective for understanding the construction of the "Belt and Road" initiative.

Enterprise financialization and technological innovation: Mechanism and heterogeneity.

After the 2008 financial crisis, under the double effects of enterprise value maximization and the decline of real economy marginal profit, the relationship between enterprise financialization and technological innovation is worth exploring in depth. On the basis of testing the impact of non-financial enterprise financialization on technological innovation, this paper explores the impact mechanism as well as the heterogeneity among different types of enterprises. This paper selects non-financial listed enterprises in China from 2007 to 2017 as samples to study the influence of enterprise financialization on technological innovation and its mechanism through panel regression and mediating effect models. Moreover, the heterogeneity among different types of enterprises is further studied. The main conclusions are as follows. First, the financialization of enterprises has a significant "crowding out" effect on technological innovation. Second, the "crowding out" effect of enterprise financialization on technological innovation is formed through capital structure rather than performance. Third, enterprises are faced with different attributes and external environment, thus the influence of financialization on technological innovation is heterogeneous. Fourth, there are significant differences in the impact of financialization on technological innovation between enterprises' attributes and the external environment they face, and the deviation degree caused by attributes is much greater than that caused by the external environment.

Performance shortfalls and financialization of non-financial enterprises in China

PurposeBased on the theory of performance feedback, this study aims to explore the theoretical relationship between performance shortfalls and the financialization of non-financial enterprises. It further analyzes the moderating effect of economic policy uncertainty (EPU) and organizational redundant resources.Design/methodology/approachMultiple regression analysis is used on 16,555 initial samples of 2,658 Chinese A-share issuing enterprises from 2007 to 2019 to empirically test the relationship between performance shortfalls and the financialization of non-financial enterprises, and an instrumental variables-generalized moments estimation model is also used to verify the robustness of the results.FindingsThe results reveal that the greater the performance gap below the aspiration level, the higher the degree of enterprise financialization. Moreover, EPU strengthens the relationship between performance shortfalls and financialization, whereas organizational redundant resources weaken the relationship between performance shortfalls and financialization.Practical implicationsDecision-makers should determine the aspirated performance level of enterprises to make investment decisions that are most conducive to the long-term development of enterprises. Each enterprise should establish scientific management evaluation and supervision systems to avoid financial investment behaviors that place too much emphasis on short-term performance.Originality/valueThis study finds that financialization is one of the reactions when performance of enterprises is lower than the aspiration level, thus expanding the functional dimensions of performance feedback and supplementing the research on the influencing factors of enterprise financialization. The results also reveal information about situational factors, helping identify the boundary conditions through which performance below aspirations affects enterprise financialization.

Literature Review on Corporate Financialization

The "de-realization" of entity enterprises is one of the hot issues in China in recent years, and an important micro-expression of this is the financialization of enterprises. This paper compares and analyses the literature on the definition, motivation and impact of corporate financialization, and gives directions for future research outlook to provide some reference and reference for subsequent research on corporate financialization.

The intergenerational succession and financialization of Chinese family enterprises: Considering the influence of heirs' growing experience.

As a mixed-methods research in economics and psychology, this study aimed to analyze the influence from the intergenerational succession on the financialization level including asset financialization and revenue financialization, and further test the moderating effect of the heirs’ typical growing experience according to The Imprinting Theory, based on the 2009–2020 annual data of listed family enterprises of China. There were two key findings. First, the effect of Chinese family enterprises’ intergenerational succession on asset financialization was positively significant while the effect on revenue financialization was not significant, indicating that the financialization behavior has not brought about effective financial profits. Second, among the heirs’ typical growing experiences, their parents’ entrepreneurial experience during their childhood, oversea study experience, and MBA education experience had the significantly positive moderating effects on the influence from intergeneration succession to asset financialization level of Chinese family enterprises, which was an important internal mechanism for the heirs to promote the financialization process of family enterprises.

Motivation Analysis of Market and Institution on Corporate Leasing Financialization from the Perspective of Regulatory Arbitrage: Evidence from Chinese Listed Companies

In recent years, more and more real enterprises speculate and arbitrage in the financial market by participating in financial institutions, and the financialization of micro enterprises has become a general trend. However, the empirical conclusions of existing literature from different dimensions of enterprise development are not consistent. This paper uses the data from Shanghai and Shenzhen A-share companies from 2007 to 2019 to perform an empirical analysis on the market and institutional motivations of the entity enterprises’ sharing and holding financial leasing companies (SHFL). It is found that the fundamental reason for enterprises to SHFL is the profit gap between the financial industry and the real industry. The more intense the industry competition, the lower the profit rate, the larger the spread, and the stronger the incentive to SHFL. In addition, the continuous improvement of the national system construction in the financial leasing industry has played an essential role in promoting it. In the heterogeneity analysis, it is found that private enterprises are also motivated to ease financing constraints except interest rate spread. On the contrary, they are not significant in the sample of state-owned enterprises. Equipment manufacturing industries have both narrowing interest rates and equipment promotion motivation, while the non-equipment manufacturing industry has no such characteristics. Finally, the limitations and future research directions of this paper are discussed.

Ownership Concentration, Regional Differences and Corporate Financialization

Does the increase in the shareholding ratio of shareholders promote or inhibit the degree of corporate financialization, or does it have other relationships? This paper selects the data of listed companies of non-financial enterprises in Shanghai and Shenzhen from 2008 to 2020, and uses the least squares method to test whether the ownership concentration has an impact on the degree of financialization of enterprises. whether there is a regional effect. The study found that, regardless of the region where the company is located, there is a positive U-shaped relationship between ownership concentration and corporate financialization. The concentration of ownership has an inhibitory effect on the degree of corporate financialization. Therefore, although a moderate degree of ownership concentration will inhibit the degree of financialization of enterprises, differences between regions should be considered when conducting corporate financialization governance. The eastern region should abandon the oppression of the real economy caused by the accumulation of financial resources, and the western region strengthens the institutional environment. Construction and optimization of financial asset allocation.

The effect of the new Environmental Protection Law on corporate financialization in China.

Using data from non-financial listed firms in China from 2008 to 2020, this study investigates the effect of the new Environmental Protection Law on corporate financialization based on the difference-in-differences model. Findings show that the law's implementation significantly increases the financialization behaviors of corporations in polluting industries. This effect remains robust after a series of robustness checks. Heterogeneity analyses suggest that the policy effect of the law is more pronounced for non-state-owned enterprises, enterprises with high fixed assets ratios, and enterprises in regions with excellent market competition. The new Environmental Protection Law also promotes the financialization of enterprises by increasing costs, reducing commercial credit financing capabilities, increasing risks, and hindering innovation. This article provides new evidence for understanding macro-environmental regulation and micro-firm effects.