Financialization and Innovation of Chinese Listed Firms: An Empirical Appraisal
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This article thoroughly examines the links between financialization and innovation activities of a sample of 312 publicly listed Chinese firms for the period 2000-2023, encompassing the crucial post-pandemic recovery phase. We utilize various panel models, including fixed effects, random effects, and dynamic estimations across different periods and financial contexts. According to our research, financialization has a negative impact on firms’ innovation rates. It harms financially constrained firms more strongly, and its impact increases over time, starting at -0.08 in the 2000-2010 period and reaching -0.22 in the 2016-2023 period. Our findings offer policy recommendations that could help mitigate the adverse effects of growing financialization on the innovation of Chinese firms.
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