In recent years, the “financial-like” behavior of non-financial enterprises has contributed to the “off real to virtual,” which has seriously restricted the virtuous cycle of finance and economy. This study selects non-financial enterprises listed on Chinese A-shares from 2008 to 2019 as the research sample, and empirically analyzes the impact of CEOs’ financial background (FB) on the shadow banking business of non-financial enterprises and its mechanism. The results show that: (1) CEOs’ FB has a positive effect on shadow banking business of non-financial enterprises; among which, the positive effect generated by non-banking FB is stronger. The conclusions still hold after robustness tests by replacing the measurement of variables, controlling for other shocks, changing the parameter estimation method, and considering the endogeneity problem. (2) The mechanism analysis reveals the positive effect mainly by reducing the level of entity investment by enterprises. (3) The heterogeneity analysis finds that, on the one hand, with respect to the internal micro characteristics of enterprises, the positive effect is more significant in state-owned enterprises, non-manufacturing enterprises, and non-growth stage enterprises. On the other hand, with respect to the external macro environment, the positive effect is more significant in periods of easy monetary policy, in industries with a higher competition or in regions with a better institutional environment. This study reveals the intrinsic mechanism of CEOs’ FB and non-financial enterprises’ shadow banking business, enriches the study of the influencing factors of non-financial enterprises’ shadow banking business, and provides micro-level empirical support to alleviate the “off real to virtual” of the economy.

This study empirically analyzes the impact of the shadow banking business (SBB) of non-financial enterprises (non-FEs) on the total factor productivity (TFP) of enterprises using data concerning non-FEs listed in China’s A-share market from 2008 to 2019. The results show that non-FEs’ SBB has a significantly negative impact on their TFP, and for every 10% increase in the involvement of non-FEs in SBB, their TFP decreases by 4.22% on average. The negative effect is more significant in the period of loose monetary policy, lower industry competition, and non-state-owned enterprises. Alleviating financing constraints, reducing information asymmetry, and optimizing financial resource allocation may mitigate the negative effect. Our study reveals the mechanism by which non-FEs’ SBB inhibits their TFP. These findings enrich the theoretical research on the two, and provide empirical evidence to alleviate the “off real to virtual” of the economy and promote long-term, high-quality and sustainable economic development.

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