Does corporate financialization help businesses innovate?—Empirical data from China's specialized and innovative enterprises

Abstract This paper empirically examines the impact of the growing financialization trend of China's specialized and innovative enterprises on their corporate innovation. The study finds that the relationship between financialization and innovation in specialized and innovative enterprises follows an inverted U ‐shaped pattern, rather than a linear one. Furthermore, we identify financing constraints as a significant mediating factor in this relationship, wherein financialization influences innovation through its effect on financing constraints. These findings provide novel empirical evidence on the interplay between financialization and innovation in China's specialized and innovative enterprises and offer valuable insights for policymakers and businesses.