Non-Financial Enterprise Financialization, Product Market Competition, and Total Factor Productivity of Enterprises

Abstract

At present, two big challenges have struck China’s economic development: economic containment “from the real to the virtual” and accomplishment in the goal of high-quality economic development. Taking China’s A-share public manufacturing enterprises from 2007 to 2020 as samples, this paper empirically analyzes the relationships among product market competition, non-financial enterprise financialization, and total factor productivity of enterprises. It is found that non-financial enterprise financialization significantly lowers down the total factor productivity of enterprises, that is, the total factor productivity of enterprises will drop by 1.7% as the non-financial enterprise financialization rises by 1 SD every time. After external regulation effects of product market competition are further taken into account, the furious product market competition, on the whole, mitigates the negative influences of non-financial enterprise financialization on total factor productivity of enterprises by strengthening the role of non-financial enterprise financialization as a “reservoir” and abating the “crowding-out” effect. Therefore, competition promotion policies combined with funds moving “from the virtual to the real” could more effectively elevate the enterprise productivity.

The impact of digital finance on SMEs financialization: Evidence from thirty million Chinese enterprise registrations

“…For example [ 19 ], empirically showed that, the higher the proportion of profits obtained through financial channels is, the lower the economic value added (EVA) of entity enterprises will be. In terms of enterprise efficiency, [ 20 , 21 ]; and [ 22 ] all showed that the financialization of entity enterprises has an impact on production efficiency. However, there is controversy regarding the specific impact direction.…”

Executive Stock Ownership and Enterprise Digital Transformation: Interest Convergence or Trench Defense

“…At present, the economic consequences of digital transformation mainly include "promotion view" and "challenge view." (1) e positive effects of digital transformation. A large number of studies have shown that through the deep integration of digital technology and enterprise strategy, digital transformation will lead to systematic changes in enterprise strategic logic, management mode, competition mode, business ecology, etc.…”

“…(1) e regulating effect of property right nature: column (1) shows the regulating effect of property right nature. It can be found that the regression coefficient of the interaction term between MSQ and SOE is −39.823, which is significant at 1% level, indicating that the property right will make the relationship curve between MS and DITL become steeper.…”

“…In recent years, China's economy has a trend of "shifting from real to virtual" [1]. Data may be identi ed as the seventh production factor after labor, capital, land, knowledge, technology, and management, re ecting that the current economic factors supporting economic and social development have begun to undergo epoch-making changes [2].…”

“…is study makes several principal contributions as follows: (1) is study enriches the theoretical research on the driving factors of enterprise digital transformation. e exploration of the antecedents of enterprise digital transformation is a hot issue of common concern to all sectors of society.…”