Against the backdrop of China’s “stabilizing investment” policy, this paper examines the impact of fiscal transparency on investment efficiency and its underlying mechanisms. In the current context of tightening fiscal constraints and challenges to the sustainability of traditional expansionary fiscal policies, it is of significant theoretical and practical importance to explore how to enhance investment efficiency by improving fiscal management effectiveness rather than merely expanding fiscal revenues and expenditures. Using panel data from 31 Chinese provinces from 2009 to 2016, with the incremental capital-output ratio (ICOR) measuring investment efficiency, this study employs dynamic panel system GMM, threshold effect, and mediation effect models for empirical analysis. The findings reveal that: First, investment efficiency in most provinces remains relatively low and shows a declining trend, while fiscal transparency exerts a significantly positive effect on investment efficiency. Second, the impact of fiscal transparency on investment efficiency exhibits a threshold effect, with notable heterogeneity between coastal and non-coastal regions. When fiscal transparency is below a certain threshold, its enhancement plays a particularly significant role in promoting investment efficiency. Third, fiscal transparency indirectly improves investment efficiency by advancing marketization, with marketization serving as a significant mediating channel. This paper not only provides empirical evidence for understanding the relationship between fiscal transparency and investment efficiency, but also offers new insights for local governments to implement the “stabilizing investment” policy under fiscal constraints. It suggests that greater emphasis should be placed on the disclosure of fiscal information, optimizing the communication of policy details, and reducing undue government intervention. By enhancing governance transparency and marketization, investment effectiveness can be strengthened, contributing to high-quality investment growth.
Wang et al. (Fri,) studied this question.