Heterogeneity Effect of Corporate Financialization on Total Factor Productivity

As corporate financialization becomes an important stylized fact, policymakers and economists are concerned that may harm firms’ productivity by reducing operation investment. However, no previous literature has assessed the heterogeneous effect of on total factor induced self-selection. In this study, we do so leveraging framework marginal treatment effects (MTE) using samples Chinese listed non-financial companies during period from 2007 to 2018. We find firms with high resistance can result in gains choosing financialization. contrast, low have a significant reduction (TFP) when Meanwhile, based our counterfactual analysis, stable fluctuation housing growth is shown impact improvement, evidence supportive TFP loss being mitigated market. Moreover, mechanism analysis confirms strong negative innovation, which potential channel depress aggregate productivity. The detected heterogeneity highlights importance price self-selection choices affect TFP. Policymakers wish focus financialization, accompanied inhibition growth, keeping market order minimize side