Impact of finance pressure on energy intensity: Evidence from China's manufacturing sectors

The purpose of this research is to explore the relationship between finance pressure and energy intensity using a firm-level data of Chinese manufacturing sectors. We introduce environmental regulation to our model to identify the technological channel through which finance pressure influence energy intensity. Our findings show that mitigation of finance pressure makes significant contribution to the reduction of energy intensity. As for the technological channel, environmental regulation plays a key role in pushing firms to invest in energy-efficiency technologies when funds are available. On the contrary, absence of environmental regulation would lead to investment in technologies that increase energy intensity. These finding are robust to different proxies for finance pressure and technology investment. Moreover, there are heterogeneous effects across regions and firms. In particular, firms in the eastern provinces and firms of non-foreign ownership are more likely to invest in energy-efficiency technologies when facing environmental regulation. These findings suggest financial policies and measures coordinate with environment and energy policies to make technological progress energy-efficiency oriented. (c) 2021 Elsevier Ltd. All rights reserved.