Does capital-oriented reform encourage financialization? Evidence from state enterprises in China

Yan Dong and Ran Ge

Finance Research Letters, 2025, vol. 76, issue C

Abstract: Although state enterprises in China in the past were managed by government agencies, capital-oriented reform has enabled the government to control state enterprises by way of investment corporations. In our study, we conducted to investigate how the reform has impacted state enterprises and found that the reform has reduced firms’ fixed asset investments while increasing their reliance on financial profits, thereby encouraging financialization. We also found that the effects exhibit heterogeneity across different administrative levels and regions with different financial conditions. Those insights offer valuable guidance for policymakers worldwide.

Keywords: Financialization; State asset management; State enterprise (search for similar items in EconPapers)
JEL-codes: G32 L33 P31 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325002521

DOI: 10.1016/j.frl.2025.106988

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