The Impact of Financial Asset Allocation on Firms’ Total Factor Productivity: Evidence from China’s Non-Financial Companies

Bo Song, Xiandong Yang and Yao Xu ()
Additional contact information
Bo Song: Business School, Qingdao University of Technology, Qingdao 266520, China
Xiandong Yang: Business School, Ludong University, Yantai 264025, China
Yao Xu: Business School, Qingdao University of Technology, Qingdao 266520, China

Sustainability, 2024, vol. 17, issue 1, 1-19

Abstract: As a core business strategy, sustainability has become increasingly important in today’s rapidly evolving world. The improvement of a firm’s total factor productivity (TFP) is necessary for the realization of sustainable development. The wide variation in the types and sizes of China’s firms can reflect the differences in financial capital allocation among firms. In addition, as the second largest economy in the world, China has a large number of firm data to be examined. Based on this, this paper selects China’s A-share non-financial listed companies from 2010 to 2023 as research samples to empirically test the impact of financial asset allocation on the TFP of firms. It is found that excessive financialization negatively affects both TFP and innovation, but that innovation can increase TFP, thus weakening the negative impact of financialization on TFP. Therefore, to enhance the productivity of firms and reach the sustainability of development, firms should invest more in innovation and reduce the level of financialization. By emphasizing innovation, firms can promote the application of green technologies and the production of green products, and achieve win–win economic and social benefits while protecting the environment, and sustainability can be realized.

Keywords: financial asset allocation; total factor productivity; innovation; sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/17/1/96/pdf (application/pdf)
https://www.mdpi.com/2071-1050/17/1/96/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:17:y:2024:i:1:p:96-:d:1554122

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().