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The role of venture capital in determining the total factor productivity of renewable energy enterprises: In the context of government subsidy reduction

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  • Lin, Boqiang
  • Xie, Yongjing

Abstract

Studies examining the correlation between venture capital (VC) and total factor productivity (TFP) have yielded inconsistent conclusions. In the context of government subsidy (GS) reduction, VC is gradually becoming a crucial external financing channel for renewable energy (RE) enterprises. Nevertheless, there is a scarcity of research concerning the influence of VC on the TFP of RE firms, and the impact of GS on their relationship is also insufficiently considered. Therefore, employing two-way fixed-effects and threshold effects models, this research investigates the impact of VC on TFP in 114 Chinese RE enterprises from 2011 to 2021 and analyzes the role of GS in shaping this association. The conclusions are outlined as follows: (1) Overall, VC notably boosts the TFP of RE firms. (2) VC can indirectly improve TFP by fostering R&D investments and mitigating financing constraints. (3) A single threshold effect is identified in the correlation between VC and TFP based on GS. Significant positive effects of VC on TFP are observed only when GS is below 1.07%. This implies that, in the context of GS reduction, the beneficial effect of VC on the TFP of RE firms is gradually becoming evident. Based on this, we propose targeted policy suggestions.

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  • Lin, Boqiang & Xie, Yongjing, 2024. "The role of venture capital in determining the total factor productivity of renewable energy enterprises: In the context of government subsidy reduction," Energy Economics, Elsevier, vol. 132(C).
    • Handle: RePEc:eee:eneeco:v:132:y:2024:i:c:s0140988324001622
    DOI: 10.1016/j.eneco.2024.107454
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    More about this item

    Keywords

    Renewable energy; Venture capital; Total factor productivity; Government subsidy; Threshold effect;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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