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Exploring the links between bank competition, economic policy uncertainty, and corporate financialization

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  • Wang, Sheng
  • Meng, Haifeng
  • Chen, Zhisheng

Abstract

This paper examines the relationship between bank competition and corporate financialization using annual data from non-financial firms listed on the Chinese A-share market from 2012 to 2022. The results indicate that heightened bank competition significantly promotes corporate financialization, with a positive correlation observed: the greater the intensity of competition, the higher the level of corporate financialization. The study further reveals that financing constraints partially mediate this relationship, suggesting that bank competition alleviates financing constraints, leading firms to allocate more funds to financial assets. Moreover, economic policy uncertainty is found to have a dual effect: it directly propels corporate financialization while indirectly dampening the responsiveness of corporate financialization to bank competition.

Suggested Citation

  • Wang, Sheng & Meng, Haifeng & Chen, Zhisheng, 2025. "Exploring the links between bank competition, economic policy uncertainty, and corporate financialization," Finance Research Letters, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325003630
    DOI: 10.1016/j.frl.2025.107100
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