Firm financialization: The role of policy inconsistency

Libo Yin, Jier Zhang and Ying Li

Finance Research Letters, 2025, vol. 80, issue C

Abstract: This study develops a novel Chinese Policy Inconsistency Index (PICI) to examine its impact on firm financialization. Using the Latent Dirichlet Allocation (LDA) model, an advanced natural language processing technique, we measure policy inconsistency by tracking thematic shifts between consecutive months from four authoritative media. Panel regression results show that PICI enhance firm financialization, even after accounting for existing uncertainties. Further analysis reveals two main channels: reduced real investment and increased financial pressure. Finally, this firm financialization is driven by precautionary savings.

Keywords: Firm financialization; Policy inconsistency; LDA model; Precautionary savings (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612325006658
Full text for ScienceDirect subscribers only

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:eee:finlet:v:80:y:2025:i:c:s1544612325006658

DOI: 10.1016/j.frl.2025.107405

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().