Author(s)

Yiping Chai, Yufan Wang and Jiayi Zhang

Corresponding Author

Yufan Wang

ABSTRACT

Based on the data about the Shanghai and Shenzhen A-share companies, from 2011 to 2018, and digital financial inclusion data, this paper researches relationship and the impact between financial digitalization and the financialization of corporate. It is found that because of the advantages of digital finance, such as convenience and low cost, when financial digitalization grows or becomes more widespread, it has a significant impact on the financialization of businesses, especially for larger firms. Through the data, this paper finds that for every unit increase in the Digital Financial Inclusion Index, the level of corporate financialization will increase by approximately 0.05%. However, excessive corporate financialization can easily have a bad impact on the real economy. This paper argues that the government should introduce relevant policies to restrict companies from using digital finance to complete the financialization of corporate.

KEYWORDS

Financialization, Digital finance, China