Financial decentralization, financial expansion and sustainable development of real enterprises from the perspective of return on invested capital

This study examines the impact of financial expansion on sustainable enterprise development using Chinese provincial panel data from 2005 to 2020. Results show financial expansion negatively affects return on invested capital (ROIC), while financial decentralization mitigates this effect. Heterogeneity analysis validates these findings in eastern and central regions. Robustness checks, including lagged effects and instrumental variable methods, confirm reliability. The study highlights the need for policymakers to balance financial expansion with sustainable growth, emphasizing financial decentralization to optimize economic outcomes.