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Corporate financialization and fixed investment rate: Evidence from China

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  • Jin, Xiao Meng
  • Mai, Yong
  • Cheung, Adrian Wai Kong

Abstract

This paper examines whether the relationship between corporate financialization and fixed investment rate is heterogeneous among China's listed non-financial enterprises. Using data from 2007 to 2016, we find that there is a negative relationship between corporate financialization and fixed investment rate. This result is consistent with the crowding out view that corporate investment in financial assets crowd out fixed investment. The relationship is moderated negatively (i.e., weakened) by monetary policy. We also find that this negative (moderating) relationship is more (less) pronounced in state-owned enterprises than in non-state-owned enterprises.

Suggested Citation

  • Jin, Xiao Meng & Mai, Yong & Cheung, Adrian Wai Kong, 2022. "Corporate financialization and fixed investment rate: Evidence from China," Finance Research Letters, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322001805
    DOI: 10.1016/j.frl.2022.102898
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    4. Ozili, Peterson K, 2023. "Correlated lending to government and the private sector: what do we learn from the Great Recession?," MPRA Paper 116407, University Library of Munich, Germany.
    5. Ke Guo & Xuemeng Guo & Jun Zhang, 2023. "Financial asset allocation duality and enterprise upgrading: empirical evidence from the Chinese A-share market," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-11, December.
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