Empirical analysis demonstrates green finance increases investment efficiency in renewable energy firms, suggesting significant policy implications.
In the global energy framework, renewable energy has been crucial in displacing fossil fuels to advance energy security and sovereignty. This paper empirically examines how green finance affects renewable energy investment, using samples of 111 renewable energy firms listed on the A‐share market between 2011 and 2020. We find that green finance in China will increase investment efficiency and reduce excessive investment by renewable energy enterprises. According to mechanism testing, green finance mainly affects the scale of renewable energy investment by controlling the debt financing scale and shortening the debt financing period. It also affects the efficiency of renewable energy investment by controlling the debt financing scale, shortening the debt financing term, and reducing debt financing costs. The heterogeneity of various industries and ownership properties was also examined. This paper offers a theoretical foundation for promoting the growth of the renewable energy sector and provides China with rich policy insights to improve its green finance system. This study supplements the relevant literature regarding how green financing affects investments in renewable energy, providing a reference for the formulation of policies related to China's renewable energy development.
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Hu et al. (2025) studied this question.
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