The Influence Of Enterprise Financialization:A Perspective Of Default Risk

Along with the persistent downturn in the real economy,the virtual economy has shown a countercyclical upward trend and there is a serious structural imbalance in economic development.The Central Work Conference at the end of 2015 pointed out that "the large amount of capital flowing into the virtual economy has inflated asset bubbles and gradually revealed financial risks".As an important microscopic subject of the financialisation of the economy,enterprises’ participation in financial investment activities has a significant impact on their financial position,especially the risk of debt default,which in turn is likely to trigger systemic risks under the transmission of the financial system.Therefore,an in-depth investigation into the effects and mechanisms of the financialisation of enterprises on the risk of debt default has become a key topic of concern for the current academic community.Against the above background,this paper first reviews the current state of research on corporate financialisation and debt default risk at home and abroad,and elaborates on the relevant theoretical foundations.Secondly,based on the theoretical basis and literature review,this paper analyses the U-shaped relationship between corporate financialisation and debt default risk,with emphasis on the mechanisms by which moderate financialisation inhibits corporate debt default risk and excessive financialisation enhances corporate debt default risk,and also discusses the heterogeneity of the impact of corporate financialisation on debt default risk.Again,this paper analyses the current situation of the degree of financialisation of non-financial listed companies and the fact of corporate bond default in China.Finally,this paper empirically tests the relationship between corporate financialisation and debt default risk,using a fixed-effects model and introducing a quadratic term for corporate financialisation to test the U-shaped relationship between corporate financialisation and debt default risk,using Chinese non-financial listed companies in Shanghai and Shenzhen A-shares from 2007 to 2019 as the research sample.Based on the theoretical analysis and empirical tests,this paper draws the following conclusions:(1)There is a U-shaped relationship between corporate financialisation and debt default risk,with moderate financialisation reducing corporate debt default risk and excessive financialisation significantly increasing corporate debt default risk,and this conclusion remains robust after being processed by propensity score matching method,instrumental variables method and double difference method.(2)Moderate allocation of financial assets reduces corporate debt default risk by alleviating financing constraints,while excessive allocation of financial assets increases corporate debt default risk by suppressing main business performance,i.e.the "reservoir" effect and "substitution" effect of corporate financialisation The "reservoir" effect and the "substitution" effect of corporate financialisation exist in moderately and excessively financialised enterprises respectively.(3)In contrast,the effect of corporate financialisation on debt default risk is more pronounced in periods of monetary policy easing,high uncertainty,state-owned enterprises,and small and medium-sized enterprises.Distinguishing from the established literature which only confines the research perspective to a linear relationship to examine corporate financialisation and its economic consequences,this paper finds a U-shaped relationship between corporate financialisation and debt default risk,and comprehensively examines the channel mechanisms through which moderate and excessive allocation of financial assets affect corporate debt default risk,which helps to comprehensively grasp and capture the economic consequences of corporate participation in financial investment,enriching and expanding the This study is not only useful for us to dialectically examine the impact of financial assets on the default risk of enterprises.This study not only helps us to look at the financialisation behaviour of Chinese real enterprises in a dialectical manner,but also has implications for the regulatory authorities in identifying over-financialised enterprises and curbing the "de-realisation" of the real economy.