Research On Financialization Motivations,methods And Effects Of Non-Financial Enterprises

With the gradual transformation of China’s economy and changes in the global market environment,rising manufacturing labor costs,excess capacity,declining profitability,coupled with insufficient innovation capabilities,physical enterprises are facing tremendous pressure for transformation.In contrast,the financial industry,with the continuous development of China’s market economy and the continuous improvement of the financial system,the financial industry’s return on investment is at a high level,which is significantly better than non-financial companies such as manufacturing.In this context,more and more non-financial companies in China are entering financial and continuing to make financial investments.Enterprises enjoy the investment income brought by financial activities,and invest more,forming a cycle of more income and investment.The trend of over-financialization of non-financial companies is becoming increasingly popular.This article takes Hongdou Group Co.,Ltd.as an example to analyze the motivation,path and effect of financialization of non-financial enterprises.The conclusions show that large enterprises using idle funds to engage in rural small loan activities can effectively establish close cooperative relationship of related parties and achieve mutual benefit.Balanced financialization level is good for development but excessive one will cause enterprises to focus too much on financial activities.Financial capital investment will increase if the investment income continues to increase,causing insufficient investment in operating activities equipment.Thus,the main business gradually gets weaker,which seriously affects the long-term development of enterprises;non-financial companies have been criticized for their excessive financialization.When non-financial companies choose to focus on the main business,instead of financial business,and putting it into practice,the public will be full of confidence in the development of the enterprise,which is conducive to shaping the corporate social image.