Does Digital Finance Fuel Corporate Financialization? Evidence from China’s Real Sector and Its Implications for Sustainable Development

This study investigates whether digital finance promotes corporate financialization in China’s real sector and examines its implications for sustainable development. Using data from Chinese A-share listed non-financial companies from 2011 to 2023, a two-way fixed-effects model is constructed to evaluate the influence of digital finance on financial asset investment by real-sector enterprises. Digital finance is measured using the Peking University Digital Inclusive Finance Index, while corporate financialization is measured by the proportion of financial assets to total assets. The results show that digital finance significantly increases financial asset allocation by real enterprises and accelerates over-financialization. This effect is more pronounced among non-technology-intensive firms, enterprises led by chief executive officers without financial backgrounds, and firms in non-high-pollution industries. Mechanism analysis indicates that digital finance promotes financial investment by alleviating financing constraints and reducing financial leverage, thereby creating additional space for financial asset allocation. Further analysis shows that such financial investment weakens core business performance. The findings provide empirical evidence for guiding digital finance toward real-economy development and sustainable capital allocation.