Research on the Influence of Financialization on the Investment Efficiency of Investment Efficiency of Non -financial Listed Companies

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Project Title: Research on the Influence of Financialization on the Investment Efficiency of Investment Efficiency of Non-financial Listed Companies
Author: Miss Li Zhen
Advisor: Dr. Zhang Li
Degree: Master of Business Administration
Major: Marketing Management
Faculty: Graduate Schools
Academic year: 2022


Conference Proceedings
2nd National and International Academic Conference Innovation and Management for Sustainability 15-16 December 2020


Li, Zhen. (2022). Research on the influence of financialization on the investment efficiency of investment efficiency of non -financial listed companies. (Master’s independent study). Bangkok: Siam University.


In order for entity enterprises to better adapt to the new requirements of high-quality economic development of China’s economy, the state has continuously implemented new policies to carry out supply-side reforms to revitalize the real economy, providing direction for entity enterprises and effectively promoting the transformation and upgrading of entity enterprises. However, the country’s entity enterprises still possess problems such as over capacity and insufficient technological innovation, which have led to a significant decline in the return on investment of enterprises. A large amount of industrial capital is concentrated in the financial industry and real estate industry, resulting in a structural imbalance between the real economy and the virtual economy. The trend of financialization of entity enterprises is obvious, and for non-financial enterprises, how to make financial investment better serve industrial investment and rationally allocate corporate financial assets has become an important research topic.

This paper sorts out relevant research literature a summarizes the current research problems of scholars. Secondly, this paper analyzed the reasons for the formation of corporate financialization and the current situation of corporate financialization. The analysis results showed that the trend of corporate financialization is obvious. Although there is no serious reduction in industrial investment, it’s a growing trend that cannot be ignored. The paper suggests that the relatively high-yield characteristics of the financial industry are the main external reasons for the increasing financialization trend of the country’s real enterprises, and the internal reason is that the real enterprises have problems such as excess capacity, high operating costs, and insufficient profit margins of industrial assets. The departure of capital from real and virtual is just an objective reflection of difficulty in implementing capital, insufficient industrial investment and low investment efficiency at the level of real enterprises. The study then conducted mechanism analysis and heterogeneity analysis on the impact of corporate financialization on industrial investment efficiency. This is vital for guiding funds to return to the real economy, promoting the transformation and upgrade of entity enterprises, and promote high-quality economic development.

The paper selected non-financial listed companies in the A-share market from 2008 to 2020 as a sample, and used unbalanced panel annual data. The paper built an OLS model to study the relationship between corporate financialization and investment efficiency. The Richardson model was used to calculate the residual value, and the data was processed as the explained variable industrial investment efficiency.

The paper chose the level of corporate financialization as an explanatory variable.Then, it explored the impact of the financial asset allocation of entity enterprises on the efficiency of industrial investment, and conducted robustness and endogeneity tests to ensure the accuracy of the empirical results. The study conducted deep analysis of whether different enterprise characteristics will strengthen or weaken the relationship between the above variables from the perspective of heterogeneity such as property rights, industries, and technological innovation degrees. This research reached the following main conclusions: (1) There was an inverted U-shaped relationship between the financialization of non-financial enterprises and the efficiency of industrial investment; (2) The financialization level of state-owned enterprises and private enterprises has a significant inverted U-shaped relationship with industrial investment efficiency. Compared with private enterprises, state-owned enterprises were more sensitive to change in the level of financialization; (3) For manufacturing and information technology enterprises, the relationship between the degree of enterprise financialization and the efficiency of industrial investment was the same as above, with an inverted U-shape. Compared with manufacturing enterprises, the information technology industry was more sensitive to changes in the level of financialization; (4) Enterprises with a high level of technological innovation can solve a certain degree of over capacity and low added value of products through their own technological innovation, and there is an inverted U-shaped relationship between their level of financialization and industrial investment efficiency; (5) The occupation of industrial funds by enterprises investing in real estate led to a downward trend in the industrial investment efficiency of enterprises. The level of investment in real estate was negatively correlated with the efficiency of industrial investment.

Keywords: financialization, non-financial listed companies, investment efficiency.

Research on the Influence of Financialization on the Investment Efficiency of Investment Efficiency of Non -financial Listed Companies

Master of Business Administration (International Program), Siam University, Bangkok, Thailand

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