Corporate financialization and investment efficiency: Evidence from China

This study analyzes the financialization impact on investment efficiency and the mechanism using data from listed nonfinancial companies in China from 2011 to 2020. Results reveal that financialization has a positive effect on investment efficiency. Cross-sectional tests show that corporate financialization can significantly improve the investment efficiency of local state-owned enterprises (SOEs) and non-SOEs, and enterprises in eastern and central China. According to mechanistic analysis, the study also finds that corporate financialization improves investment efficiency by alleviating financing constraints. By suggesting the government unblock financing channels and increase capital liquidity, our findings can guide the financial sector to better serve the real economy.