The Dynamics Between Profitability and Financialization in G20 Non-financial Corporations

Hillarius Mariando Label Dhani Sanjaya () and Diny Ghuzini ()
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Hillarius Mariando Label Dhani Sanjaya: Universitas Gadjah Mada
Diny Ghuzini: Universitas Gadjah Mada

A chapter in Eurasian Business and Economics Perspectives, 2025, pp 119-134 from Springer

Abstract: Abstract Recent studies have highlighted the substantial impact of financial asset ownership on the performance of non-financial corporations (NFCs) in the productive sector. However, limited focus has been directed toward investigating how the activities of NFCs in the actual productive sector can, in turn, drive financialization. This research aims to analyze how variables in the real sector, especially profitability, affect financialization. The research was conducted on more than 5000 non-financial companies in G20 countries from 2006 to 2023 using a dynamic panel data model. Our findings are summarized as follows: Real sector profitability has a significant positive effect on the expansion of financial assets among NFCs in G20 countries. Other independent variables tested, such as capital reinvestment, exhibit a negative influence on the expansion of NFCs’ financial assets, while financial sector profitability positively impacts financial assets ownership of NFCs. The research further demonstrates that financialization is associated with a decline in capital intensity within NFCs.

Keywords: Financialization; Profitability; Non-financial corporations (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eurchp:978-3-031-85312-8_7

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DOI: 10.1007/978-3-031-85312-8_7

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