Impacts of the financialization of manufacturing enterprises on total factor productivity: empirical examination from China's listed companies

Siming Liu; Xiaoyan Shen; Tianpei Jiang; Pierre Failler; Siming Liu; Xiaoyan Shen; Tianpei Jiang; Pierre Failler

doi:10.3934/GF.2021005

Green Finance

2021, Volume 3, Issue 1: 59-89. doi: 10.3934/GF.2021005

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Research article

Impacts of the financialization of manufacturing enterprises on total factor productivity: empirical examination from China's listed companies

1.
School of Statistics, University of International Business and Economics, Beijing, China
2.
Bank of Communications Pacific Credit Card Center, Shanghai, China
3.
Economics and Finance Subject Group, Portsmouth Business School, University of Portsmouth, Portsmouth, United Kingdom

Received: 22 January 2021 Accepted: 15 March 2021 Published: 19 March 2021
JEL Codes: D21, D24, G31, G38

This paper examines the effects and mechanism of the financialization of manufacturing enterprises on total factor productivity (TFP). Thus, it provides evidence of the economic consequences of corporate financialization from the perspective of productivity. Using the panel data of China's listed manufacturing companies from 2007 to 2018, the level of corporate financialization is measured using the proportion of financial assets in the total assets. The results show that the deepening of the financialization of manufacturing enterprises significantly reduces TFP and the magnitude of the impacts of different types of financial assets variates. In addition, the effects of corporate financialization on TFP are heterogeneous in terms of their significance and degrees in different types of enterprises as well as in different levels of enterprises' TFP. The further analysis of the influencing mechanism shows that corporate financialization has different effects on the TFP of manufacturing enterprises through technological innovation and resource allocation efficiency.
- corporate financialization,
- manufacturing enterprises,
- total factor productivity,
- heterogeneous effect,
- influencing mechanism
Citation: Siming Liu, Xiaoyan Shen, Tianpei Jiang, Pierre Failler. Impacts of the financialization of manufacturing enterprises on total factor productivity: empirical examination from China's listed companies[J]. Green Finance, 2021, 3(1): 59-89. doi: 10.3934/GF.2021005

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Abstract

This paper examines the effects and mechanism of the financialization of manufacturing enterprises on total factor productivity (TFP). Thus, it provides evidence of the economic consequences of corporate financialization from the perspective of productivity. Using the panel data of China's listed manufacturing companies from 2007 to 2018, the level of corporate financialization is measured using the proportion of financial assets in the total assets. The results show that the deepening of the financialization of manufacturing enterprises significantly reduces TFP and the magnitude of the impacts of different types of financial assets variates. In addition, the effects of corporate financialization on TFP are heterogeneous in terms of their significance and degrees in different types of enterprises as well as in different levels of enterprises' TFP. The further analysis of the influencing mechanism shows that corporate financialization has different effects on the TFP of manufacturing enterprises through technological innovation and resource allocation efficiency.

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