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Does capital-oriented reform encourage financialization? Evidence from state enterprises in China

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  • Dong, Yan
  • Ge, Ran

Abstract

Although state enterprises in China in the past were managed by government agencies, capital-oriented reform has enabled the government to control state enterprises by way of investment corporations. In our study, we conducted to investigate how the reform has impacted state enterprises and found that the reform has reduced firms’ fixed asset investments while increasing their reliance on financial profits, thereby encouraging financialization. We also found that the effects exhibit heterogeneity across different administrative levels and regions with different financial conditions. Those insights offer valuable guidance for policymakers worldwide.

Suggested Citation

  • Dong, Yan & Ge, Ran, 2025. "Does capital-oriented reform encourage financialization? Evidence from state enterprises in China," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002521
    DOI: 10.1016/j.frl.2025.106988
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    More about this item

    Keywords

    Financialization; State asset management; State enterprise;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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