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...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2025-12-01
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| Series: | Cogent Economics & Finance |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2025.2460078 |
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| author | Mingyao Wang Normaziah Mohd Nor Norhuda Abdul Rahim Faisal Khan Ziyu Zhou |
| author_facet | Mingyao Wang Normaziah Mohd Nor Norhuda Abdul Rahim Faisal Khan Ziyu Zhou |
| author_sort | Mingyao Wang |
| collection | DOAJ |
| 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. |
| format | Article |
| id | doaj-art-bb653bcad05e4190b91d133c2b85b70e |
| institution | Kabale University |
| issn | 2332-2039 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj-art-bb653bcad05e4190b91d133c2b85b70e2025-02-03T06:33:42ZengTaylor & Francis GroupCogent Economics & Finance2332-20392025-12-0113110.1080/23322039.2025.2460078Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in ChinaMingyao Wang0Normaziah Mohd Nor1Norhuda Abdul Rahim2Faisal Khan3Ziyu Zhou4School of Business and Economics, Universiti Putra Malaysia, Serdang, Selangor, MalaysiaSchool of Business and Economics, Universiti Putra Malaysia, Serdang, Selangor, MalaysiaSchool of Business and Economics, Universiti Putra Malaysia, Serdang, Selangor, MalaysiaCollege of Business, City University Ajman, Ajman, United Arab EmiratesAzman Hashim International Business School, Universiti Teknologi Malaysia, Kuala Lumpur, MalaysiaThis 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.https://www.tandfonline.com/doi/10.1080/23322039.2025.2460078Trade policy uncertaintycorporate financializationrisk-takingfinancing constraintscash holdingsderivatives |
| spellingShingle | Mingyao Wang Normaziah Mohd Nor Norhuda Abdul Rahim Faisal Khan Ziyu Zhou Trade policy uncertainty and corporate financialization: strategic implications for non-financial firms in China Cogent Economics & Finance Trade policy uncertainty corporate financialization risk-taking financing constraints cash holdings derivatives |
| 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 |
| topic | Trade policy uncertainty corporate financialization risk-taking financing constraints cash holdings derivatives |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2025.2460078 |
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