The Motivation And Economic Consequences Of Corporate Financialization

China’s economy has experienced a stage of rapid growth for twenty years,gradually entering the stage of structural transformation,with the global economic downside risk coming,the real economy gradually fell into development difficulties,at the same time,the financial sector demonstrated a flourishing tendency as a result of China’s financial market system’s ongoing improvement.In such a complex and severe economic situation,many real enterprises choose to invest funds in the financial field,thereby increasing corporate performance.Yet,excessive financial investment may raise financial risks,displace real investment,and impede the growth of the real economy.Therefore,it is important to understand and study the motivations and economic consequences of financialization.This paper selects Junzheng Group,a leading enterprise in the chemical industry,as an example,and divides its financialization process into three stages by sorting out its financial allocation and path,and explores the development process of Junzheng Group forming "industry as the wheel and finance as the wing".In comprehensively considering factors such as the industry background,its own development and the actual controller of Junzheng Group,the motivation of financial investment is analyzed through theories such as investment substitution theory.Via horizontal and vertical comparison,the economic effects of financialization are examined from the perspectives of market performance,financial performance,and financial risk,and the positive or negative impact of financialization on Junzheng Group is studied.Ultimately,on the basis of the findings of this article,sane recommendations are made from the viewpoints of company management,shareholders,investors and policymakers.The study finds that the motivation of Junzheng Group for financialization is diverse,and factors such as the macro background of the industry and the financial experience of major shareholders will promote the financialization of the group.In the initial stage of financialization,the short-term market performance is good,the stock price rises,the market value is improved,the market response is positive,financial investment can "feed" the industry,improve the profitability of Junzheng Group,reduce financial risks,accumulate funds for the later main business investment,improve the level of enterprise innovation and research and development,and play the role of "reservoir".However,in the high stage of financialization,with the long-term crowding out of real investment by financial asset investment,there is a serious negative impact on the development of the main business,and the long-term lack of funds has led to Junzheng Group being in a state of high pledge for a long time,increasing external financing,and improving the degree of financialization to reduce the solvency of Junzheng Group and improve financial risks.Based on this,this paper argues that when carrying out financialization,entity enterprises must not blindly arbitrage and affect the development of the main business,and should adjust the structure and proportion of financial assets in a timely manner,giving full play to the role of financial investment as a "reservoir";Regulators should strengthen supervision to prevent excessive financialization of enterprises;Policy makers need to pay attention to the operational difficulties of real enterprises and improve the operating environment of real enterprises.