Does the financialization of entity enterprises hinder efficient growth?

Abstract

Entity enterprises are crucial to high-quality economic development. However, in order to pursue a higher return on investment, more and more real enterprises have become financialized. This paper takes the real listed enterprises of China's A-share market as the research sample and empirically examines the impact effect and internal mechanism of financialization on the efficient growth of enterprises. The possible contributions lie in the following two points: First, empirical research has found that financialization has inhibited the efficient growth of enterprises, which is generally manifested as a "crowding-out" effect; Second, mechanism tests show that financialization restrains the efficient growth of enterprises by squeezing out R&D investment and reducing innovation output. The research in this paper provides micro evidence that financialization affects the efficient growth of real enterprises, and offers some countermeasure suggestions for the government and enterprises to govern the financialization problem and rationally allocate resources to promote efficient growth.