Digital Transformation of Enterprises and Corporate Financialization

Jianan Li

doi:10.54097/a4hdg369

Authors

Jianan Li

DOI:

https://doi.org/10.54097/a4hdg369

Keywords:

Digitalization; Financial Behavior; Real Economy.

Abstract

With the rapid evolution of digital technology, corporate digitization has emerged as a major strategy for accelerating China’s economic transformation. However, economic transformation is not without obstacles. Since the amount of financialization in firms increases during the digital transformation, compounding the issue of enterprises "moving away from the real economy." Based on data from Chinese listed non-financial firms from 2011 to 2022, this article explores the influence of digital transformation on non-financial enterprises' financialization. The results reveal that digital transformation promotes non-financial firms to increase holdings of financial products, boosting the extent of financialization. Through further theoretical analysis, it is found that digital technology facilitates enterprise access to capital markets and stimulates the motivation for financialization through the avenues of "reserve motive" and "investment substitution". This paper provides empirical evidence for the exacerbation of financialization in non-financial enterprises due to digital transformation, and theoretically elucidates the underlying mechanisms, offering valuable insights for the sound evolution of enterprise digital transformation.

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