Abstract: Based on the fact of transforming the economy from substantial to fictitious may cause systemic risks, this paper explores whether the combination of firm innovation and financialization has the effect of“resonance”or “write-off”effect on firm financial risks?This paper selects the empirical data of China’s A-share listed companies from 2007 to 2017,a series of robustness results show that the interaction between financialization and innovation reduces the financial risk, which is manifested as“write-off”effect.Channel analysis reveals that the combined effect of financialization and innovation reduces financial risks by improving the development capability of firm internally and playing the role of signal transmission externally.Finally, the“write-off”effect is more obvious with high-quality innovation.The conclusion of this paper reveals the important role of“combination of industry and finance”of financialization and high-quality innovation in restraining financial risks.

Keywords: Fictitious Economy;Financialization;Innovation;Write-off;Financial Risk