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The financialization of nonfinancial companies in China: A macroeconomic perspective

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  • Yang, Baochen
  • Chen, Fengrui

Abstract

We examine the convergence of corporate financialization and the impact of macroeconomic changes on corporate financialization in Chinese nonfinancial listed companies. Strong evidence suggests that multiple convergence clubs exist and that macroeconomic changes play an essential role in their composition. Economic growth and financial development positively affect corporate financial asset allocation, while monetary policy negatively affects corporate financial asset allocation. Given macroeconomic changes, companies with high financial investment profitability and low financing constraints tend to allocate more to financial assets. In contrast, companies with poor financial investment performance and limited financing capacity do not have significant financial investment preferences.

Suggested Citation

  • Yang, Baochen & Chen, Fengrui, 2023. "The financialization of nonfinancial companies in China: A macroeconomic perspective," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s1544612322005840
    DOI: 10.1016/j.frl.2022.103407
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    More about this item

    Keywords

    Corporate financialization; Economic growth; Financial development; Monetary policy; Club convergence;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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