Research On The Motivations And Consequences Of Entity Enterprise Financialization

Since the reform and opening up,the industrial chain system of China’s national economy,dominated by the real economy,has been continuously improved,becoming an important engine of economic growth.At the same time,the virtual economy,represented by stocks,bonds,and various financial innovative products,has developed rapidly,attracting a large amount of industrial capital investment,seriously crowding out the enterprise operating funds,prompting physical enterprises to "move away from reality to virtual reality," leading to a trend of financialization.In this context,China has successively introduced a number of measures to guide the return of industrial capital to entities to prevent the occurrence of systemic financial risks.In December 2016,the Central Economic Work Conference proposed to "focus on revitalizing the real economy",clarifying the focus of China’s economic development;The report of the 19 th National Congress of the Communist Party of China firmly calls for strengthening the function of financial services for the real economy to avoid excessive financialization.This article takes Zhezhong Group Co.,Ltd as an example to study the causes and consequences of the financialization of physical enterprises.This article first sorts out and summarizes the domestic and foreign literature on the financialization of physical enterprises,and expounds the basic concepts and theoretical basis related to the financialization of physical enterprises;Secondly,selecting A-share listed companies in the Shanghai and Shenzhen stock markets from 2007 to 2021 as a sample,this paper generally introduces the current situation and existing problems of China’s entity enterprise financialization;Thirdly,it points out the current situation and implementation path of Zhezhong Group Co.,Ltd financialization;Finally,it analyzes the main reasons for promoting the development of Zhezhong Group Co.,Ltd financialization,as well as the impact of financialization on the company’s financial ability,physical investment,and comprehensive strength.The main research conclusions obtained in this article are as follows:(1)When the main business of enterprises is poorly managed,moderate financialization can play a good role in "reservoir" and "investment substitution",helping the development of physical enterprises;(2)Long term financialization has weakened some key capabilities in the development process of enterprises,leading to a decline in their overall strength and hindering the healthy development of physical enterprises.Based on the above conclusions,this article proposes suggestions from three perspectives: firstly,the participation of physical enterprises in financial activities should be moderate;Secondly,policies encourage industrial development and avoid investment seeking profits;Thirdly,the country should improve its regulatory measures and strengthen financial supervision.