The financing efficiency of listed energy conservation and environmental protection firms: Evidence and implications for green finance in China

With the implementation of a series of policies related to the energy conservation and environmental protection (ECEP) industry, green finance has become a crucial approach to provide credits for the ECEP industry. Using data on Chinese-listed ECEP firms from 2010 to 2019, this work quantitatively identifies the financing efficiency of these firms and its determinants. The main results show that banks are still dominant in the Chinese financial market for providing credits, and firms listed on the second board show higher financing efficiency. The financing efficiency of firms located in the central and western regions improves significantly, especially after 2016, reflecting the interaction effect of green finance policies and economic policies supporting underdeveloped regions. Both country-level factors (e.g., formal institutions and financial supervision) and firm-level factors (e.g., firm size and debt ratio) have an impact on financing efficiency. These findings have important implications for policymakers who are carefully contemplating green finance policies to support ECEP firms through an effective financial market mechanism, which eventually helps to realize the transition of the energy sector. •This paper examines the financing efficiency of Chinese ECEP firms.•Financing efficiency of firms in Western and Central regions has been improved.•Banks are overall a better provider of green finance.•The policies issued supporting ECEP firms in 2013 and 2019 are more effective.