ESG Performance as a Moderator: Alleviating Corporate Financing Constraints under Economic Policy Uncertainty

In the context of increasing global economic complexity and rising productivity, persistent financing constraints continue to pose critical impediments to corporate growth trajectories. This study empirically examines the relationship between economic policy uncertainty (EPU) and corporate financing constraints using the data of China's A-share non-financial listed entities from2014 to 2023. By leveraging financial data and employing a two-way fixed effects model, this study investigates how fluctuations in EPU affect the corporate funding accessibility while assessing the potential moderating function of ESG performance metrics. Robustness checks incorporating alternative variable measurements and temporal specifications substantiate our empirical findings. The analysis reveals that heightened economic policy uncertainty significantly amplifies financing constraints, exacerbating capital acquisition challenges for operational expansion and strategic investments. Conversely, companies with superior ESG performance were found to experience less severe impacts from such uncertainty, effectively buffering the adverse effects of EPU. This paper contributes an innovative perspective on the intersection of economic policy uncertainty, ESG practices, and corporate financing challenges, offering empirical evidence that reinforces the moderating influence of ESG performance. The results provide valuable guidance for businesses aiming to reduce financing constraints and present actionable policy recommendations for governments, financial institutions, and investors, highlighting the importance of supporting sustainable economic growth through enhanced ESG practices.