Regulatory Policy Improves Financial Resource Misallocation: A Perspective from China's Securities Firms

In the context of promoting high-quality economic development, improving the efficiency of financial resource allocation is crucial. This study focuses on China's securities industry, using data from 2019 to 2023, and treats the 2020 revision of the "Regulations on the Classification Supervision of Securities Companies" as a quasi-natural experiment. A continuous difference-in-differences model is employed to examine the effect of regulatory policies on reducing resource misallocation within the industry. The findings show that the intensity of the policy shock is significantly negatively correlated with the degree of resource misallocation among securities firms at the 1% level. This conclusion remains robust to a series of tests, including using alternative variable measures and changing the sample period. Further heterogeneity analysis indicates that the policy improvement effect is more pronounced in state-owned securities firms and those with initially lower levels of resource misallocation, while no significant size-related heterogeneity is observed. Exploratory analysis of the transmission mechanism does not find significant mediating effects through wealth management transformation and research and development (R&D) investment. This study provides empirical evidence for refining the classified regulatory system.