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Industrial financialization and cross-sectoral risk contagion: A capital flow perspective

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  • Huang, Zhehao
  • Chen, Shuanglian
  • Su, Yaya
  • Sahin, Sercin

Abstract

In this paper, we investigate how industrial financialization reshapes cross-sectoral risk contagion from a capital flow perspective. Cross-sectoral risk contagion networks are constructed, and a novel technique, the control perturbation method, is developed to formulate the cross-sectoral risk contagion patterns induced by the financialization of the industrial sector. The empirical analysis reveals that the financialization of the industrial sector systematically amplifies cross-sectoral risk contagion, ultimately inducing ergodic risk propagation dynamics across the economic system.

Suggested Citation

  • Huang, Zhehao & Chen, Shuanglian & Su, Yaya & Sahin, Sercin, 2025. "Industrial financialization and cross-sectoral risk contagion: A capital flow perspective," Finance Research Letters, Elsevier, vol. 86(PD).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pd:s1544612325018987
    DOI: 10.1016/j.frl.2025.108644
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