Corporate Financialization, Crowding-Out of Real Investment, and Efficiency Loss: A Theoretical Explanation of the Shift from Real to Virtual Economy

Changyu Zhao

doi:10.47297/wspdecWSP2515-797301.20261005

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Corporate Financialization, Crowding-Out of Real Investment, and Efficiency Loss: A Theoretical Explanation of the Shift from Real to Virtual Economy

Volume 10, Issue 5

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Corporate Financialization, Crowding-Out of Real Investment, and Efficiency Loss: A Theoretical Explanation of the Shift from Real to Virtual Economy
Corporate Financialization, Crowding-Out of Real Investment, and Efficiency Loss: A Theoretical Explanation of the Shift from Real to Virtual Economy
Jinan New Channel-JUTES High School, Jinan, Shandong, 250000, China
Vol. 10, Issue 5, Pages: 5-8(2026)
Online First：14 August 2026，

Published：30 May 2026
DOI：10.47297/wspdecWSP2515-797301.20261005
Accepted：

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Zhao Changyu.Corporate Financialization, Crowding-Out of Real Investment, and Efficiency Loss: A Theoretical Explanation of the Shift from Real to Virtual Economy[J].Development Economics of China,2026,10(05):5-8.
DOI：

Zhao Changyu.Corporate Financialization, Crowding-Out of Real Investment, and Efficiency Loss: A Theoretical Explanation of the Shift from Real to Virtual Economy[J].Development Economics of China,2026,10(05):5-8. DOI： 10.47297/wspdecWSP2515-797301.20261005.

摘要

Abstract

Corporate financialization can help to understand why nonfinancial companies choose to increase financial investments at the expense of productive investments. This paper examines how financialization crowds out investment and causes inefficiencies through the mechanism of transition from the real to the virtual world. Financialization is not just an investment choice but also a change of goals

incentives

and capital flows. The company may cut down fixed investment

research and development

and improve its operations if it sees better prospects in the financial sector than in production. Financialization can have detrimental consequences for the economy in general.

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Keywords

references

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