Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China
This study investigates the impact of trade policy uncertainty (TPU) on the financialization of non-financial firms in China. Corporate financialization is the process in which corporations prioritize financial assets and generate profits primarily via financial investments rather than product marke...
| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Cogent OA
2025
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| Online Access: | http://psasir.upm.edu.my/id/eprint/120872/ http://psasir.upm.edu.my/id/eprint/120872/1/120872.pdf |
| _version_ | 1848868234535632896 |
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| author | Wang, Mingyao Mohd Nor, Normaziah Abdul Rahim, Norhuda Khan, Faisal Zhou, Ziyu |
| author_facet | Wang, Mingyao Mohd Nor, Normaziah Abdul Rahim, Norhuda Khan, Faisal Zhou, Ziyu |
| author_sort | Wang, Mingyao |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This study investigates the impact of trade policy uncertainty (TPU) on the financialization of non-financial firms in China. Corporate financialization is the process in which corporations prioritize financial assets and generate profits primarily via financial investments rather than product markets. Using 27,339 firm-year observations of China A-share listed companies from unbalanced panel data spanning from 2011-Q1 to 2020-Q4, we utilized the fixed effect model (FEM), instrumental variables–two-stage least squares (IV-2SLS), and generalized method of moments (GMM) approaches. The findings reveal a positive relationship between TPU and corporate financialization. Financing constraints and risk-taking play moderating roles in shaping this relationship. Notably, as TPU rises, companies tend to avoid increasing investment in derivatives. Instead, they expand their precautionary savings by retaining larger amounts of cash. This analysis emphasizes the significance of legislators in ensuring policy stability and fostering a secure business environment. Furthermore, the robustness of these results was sustained when alternative key variables and methodologies were applied. |
| first_indexed | 2025-11-15T14:49:09Z |
| format | Article |
| id | upm-120872 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T14:49:09Z |
| publishDate | 2025 |
| publisher | Cogent OA |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-1208722025-10-14T04:22:27Z http://psasir.upm.edu.my/id/eprint/120872/ Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China Wang, Mingyao Mohd Nor, Normaziah Abdul Rahim, Norhuda Khan, Faisal Zhou, Ziyu This study investigates the impact of trade policy uncertainty (TPU) on the financialization of non-financial firms in China. Corporate financialization is the process in which corporations prioritize financial assets and generate profits primarily via financial investments rather than product markets. Using 27,339 firm-year observations of China A-share listed companies from unbalanced panel data spanning from 2011-Q1 to 2020-Q4, we utilized the fixed effect model (FEM), instrumental variables–two-stage least squares (IV-2SLS), and generalized method of moments (GMM) approaches. The findings reveal a positive relationship between TPU and corporate financialization. Financing constraints and risk-taking play moderating roles in shaping this relationship. Notably, as TPU rises, companies tend to avoid increasing investment in derivatives. Instead, they expand their precautionary savings by retaining larger amounts of cash. This analysis emphasizes the significance of legislators in ensuring policy stability and fostering a secure business environment. Furthermore, the robustness of these results was sustained when alternative key variables and methodologies were applied. Cogent OA 2025 Article PeerReviewed text en cc_by_4 http://psasir.upm.edu.my/id/eprint/120872/1/120872.pdf Wang, Mingyao and Mohd Nor, Normaziah and Abdul Rahim, Norhuda and Khan, Faisal and Zhou, Ziyu (2025) Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China. Cogent Economics and Finance, 13 (1). art. no. 2460078. pp. 1-22. ISSN 2332-2039 https://www.tandfonline.com/doi/full/10.1080/23322039.2025.2460078 10.1080/23322039.2025.2460078 |
| spellingShingle | Wang, Mingyao Mohd Nor, Normaziah Abdul Rahim, Norhuda Khan, Faisal Zhou, Ziyu Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China |
| title | Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China |
| title_full | Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China |
| title_fullStr | Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China |
| title_full_unstemmed | Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China |
| title_short | Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China |
| title_sort | trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in china |
| url | http://psasir.upm.edu.my/id/eprint/120872/ http://psasir.upm.edu.my/id/eprint/120872/ http://psasir.upm.edu.my/id/eprint/120872/ http://psasir.upm.edu.my/id/eprint/120872/1/120872.pdf |