Financing Constraints and Firm Profitability: Evidence from Chinese A-Share Listed Firms, 2020–2024

Against the background of tighter credit conditions and rising uncertainty in the real economy, the financing ability of listed firms has become increasingly important for stable operations and sustainable growth. This paper examines whether financing constraints suppress corporate profitability among Chinese A-share listed companies during 2020–2024. The study aims to clarify the direction of this relationship and provide evidence for improving firms’ financing conditions and operating quality. A panel-data approach is adopted. After excluding financial firms and special-treatment firms, the sample is analyzed through descriptive statistics and two-way fixed-effects regressions. Corporate profitability is measured by return on assets, while financing constraints are mainly captured by the Size-Age(SA) index and further checked with indexthe Whited-Wu(WW) index and the Kaplan–Zingales(KZ) index. The results show that stronger financing constraints generally reduce corporate profitability. Therefore, it can be inferred that reducing financing barriers may help improve the business performance of enterprises.