The role of patient capital in mitigating systemic risk

Systemic risk in non-financial firms have become a critical factor threatening financial stability. This study adopts the perspective of long-term capital attributes to investigate how patient capital shapes a firm’s systemic risk, using a comprehensive sample of Chinese listed firms from 2014 to 2023. The empirical results reveal that patient capital significantly mitigates firms’ marginal tail contribution to systemic risk, and this core finding remains valid after addressing endogeneity concerns and a series of robustness tests. Channel examinations demonstrate that patient capital mitigates systemic risk by easing financing constraints and boosting long-term investment. Further heterogeneity tests suggest that such risk-mitigating effects are more pronounced among non-state-owned enterprises, small-scale firms, and competitive industries. This work expands research at the intersection of capital characteristics and financial stability and delivers new micro-level evidence for policies aiming to curb systemic risk within non-financial sectors.