Green finance structure and green total factor productivity of energy firms

Abstract

Advancing the energy sector’s sustainable transformation requires structural optimization of the green financial system. Differentiating between bank- and market-dominated systems, this study categorizes green financial instruments into indirect financing (green credit) and direct financing (green bonds, green stocks, and green funds). It examines pathways to enhance green total factor productivity (GTFP) of energy firms by shifting from credit hegemony to market diversification. The findings indicate that: (1) Green finance significantly promotes GTFP in energy firms; however, the effect of market-dominated direct financing is notably stronger than that of bank-dominated indirect financing, revealing the advantages of market diversification; (2) The positive effect of green credit (indirect financing) is limited to state-owned enterprises and the new energy sector, showing a clear credit preference. In contrast, direct financing mitigates ownership discrimination and benefits all energy firms, especially non-state-owned and new energy companies, demonstrating greater market inclusiveness; (3) Mechanism tests show that green finance enhances GTFP of energy firms by improving green innovation quality and reducing carbon emissions. This study clarifies the logic by which green finance drives transformation of energy firms, providing a scientific basis for policy design that shifts from reliance on a single credit channel toward incentivizing collaboration among diverse market participants.

Keywords

Green finance / structural differences / energy firms / green total factor productivity

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