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Abstract Energy efficiency improvement is one of the win–win measures for sustainable development by simultaneously saving energy resources, reducing greenhouse gases, and promoting economic development. However, firms may postpone their energy efficiency plans due to credit constraint conditions. This paper evaluates how credit constraint conditions affect energy efficiency improvement based on data of 5,154 manufacturing firms from 39 countries. The estimation results indicate that lifting credit constraints for constrained firms would increase their energy efficiency by seven percentage points. The aggregate results at the industrial sector level are consistent with those documented in previous studies. However, our results further reveal that energy efficiency and treatment effects vary across industrial sectors and firms within a sector of interest. This provides supportive evidence for policymakers to design loan guarantee programs and credit supply, among the sectoral policies and regulations, for energy efficiency improvement.
Zhang et al. (Wed,) studied this question.