Digital Innovation and Financialisation in China’s Real Economy: Firm-Level Evidence on Productivity, Risk, and Policy Implications

This study investigates the impact of technical innovation on corporate financialisation, defined as the transition from productive investments to financial assets, utilising panel data from China’s A-share non-financial listed companies from 2007 to 2020. The impact of technology innovation on financialisation is contingent upon enterprises’ financial asset allocation objectives. Innovation diminishes financialisation by enhancing enterprises’ productive financial performance (e.g. ROA), yet may augment it when firms emphasise speculative profits. The effect is varied: more pronounced for enterprises with little liquidity, intense market competition, or sectors that are not capital-intensive. Policy implications indicate (1) proactive financial asset oversight by regulators, (2) focused assistance for enterprises exhibiting significant innovation marginal effects, and (3) enhanced intellectual property protection to promote genuine economic innovation rather than financial arbitrage.