Does financialization affect firm’ R&D investment? Evidence from China

Li Liu and Jun He

Finance Research Letters, 2023, vol. 58, issue PA

Abstract: This paper explores the impact of financialization on firms’ R&D investment and innovation. Based on listed companies in Chinese stock markets, we find that financialization significantly inhibits firms’ R&D investment. To further investigate the above relationship, we introduce the square of the financialization into the regression and find that there is a significant inverted-U relationship, indicating that moderate financialization can promote corporate innovation, while excessive financialization significantly inhibits it. Our findings enhance our understanding the determinants of financialization on R&D investment. In addition, we also provide policy implications for regulators that are concerned with corporate financing and innovation.

Keywords: Financialization; R&D investment; Innovation (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323006839

DOI: 10.1016/j.frl.2023.104311

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