Digital finance and total factor productivity of renewable energy enterprises: role of capital reallocation and supply chain optimization

The transition to sustainable energy is challenged by supply chain vulnerabilities, resource misallocation, and low productivity across the global renewable energy industry. Amidst a backdrop of declining government subsidies, it is critical to explore alternative financing mechanisms, such as digital finance, to support renewable energy development. Based on panel data from 161 Chinese listed renewable energy enterprises spanning 2007 to 2021, this study employs a two-way fixed effects model to examine the impact of digital finance on the total factor productivity (TFP) of the renewable energy sector. We find that: (1) Digital finance significantly increases the TFP of renewable energy enterprises. (2) The mechanisms include enhancing supply chain resilience, reducing capital misallocation, fostering supply chain diversification, and stimulating technological innovation. (3) The effect is particularly pronounced in enterprises with closer bank-enterprise linkages, advanced digital infrastructure, and smaller firm size, and is amplified in regions with more developed financial systems, superior digital infrastructure, and sound regulatory frameworks. Our findings provide empirical evidence supporting digital finance as a market-based alternative to subsidies in promoting sustainable growth of renewable energy.