The Impact of the Financialization of Entity Enterprises on the Financial Risks of Enterprises

Ying Wu

Abstract: Based on the current phenomenon of the financialization of entity enterprises, this paper studies the impact of entity enterprise financialization on corporate financial risks. Taking China’s A-share listed companies from 2013 to 2019 as a sample, we constructed various indicators to measure the financialization of real enterprises, and used the panel two-way fixed effects model for regression analysis. The regression results show that the financialization of real enterprises will increase the financial risks of enterprises. At the same time, it also shows that the motives of corporate financialization are mainly replacement motives. This article provides micro-level empirical evidence for studying the impact of financialization on the real economy. At the same time, the conclusions of this article also have a certain enlightenment for the government to guide the real enterprises to remove from the virtual to the real.

Keywords: Financialization, Financial risk, Equity participation in financial institutions