The influence of non-financial enterprises' financialization on total factor productivity of enterprises: Promotion or inhibition?

In recent years, the increasing trend of financialization of non-financial enterprises and the improvement of total factor productivity (TFP) have attracted extensive attention. The research sample for this study covers non-financial firms listed on the Shanghai and Shenzhen stock exchanges from 2008 to 2020. Then an econometric regression model is built to examine the impact of financialization of non-financial enterprises on enterprises' TFP. The mediation effect model is used to investigate the mechanisms of non-financial enterprises' financialization (NFEF) on TFP. The heterogeneity in investment efficiency, property rights and political affiliation is further discussed. The findings show that the NFEF has a considerable negative influence on enterprises' TFP, which still stands after endogenous treatment and a series of robustness tests. Moreover, NFEF significantly inhibits TFP by crowding out R&D investment and significantly promotes TFP by alleviating financing restrictions. Both the ‘crowding-out effect’ and ‘reservoir effect’ of financialization of non-financial enterprises are verified, and the former is greater. The influence of NFEF on TFP has the heterogeneity in investment efficiency and political affiliation, but the heterogeneity in property rights is insignificant.