Financial support efficiency for China's green industries: A DEA and system dynamics analysis

The green and low-carbon (GL) industry, which has become a strategic industry prioritized by the Chinese government in this era of green transformation, is vital for achieving China’s carbon peaking and neutrality goals. To achieve sustainable and healthy development of the GL industry, it is indispensable to improve the efficiency of financial resources and financial market’s incentive mechanisms. This paper introduces a comprehensive research framework that combines DEA, Tobit regression, and a SD model to evaluate the financial support efficiency (FSE) of China’s GL industry and analyzed the evolutionary trends of various financial factors on FSE. The results reveal that the efficiency of financial resource allocation in the GL industry is not yet optimal, and pure technical efficiency (PTE) is the key factor restricting firms from effectively achieving comprehensive efficiency. The overall FSE demonstrated a slight downward trend, which was predominantly related to the small decline in comprehensive technical efficiency (TE). Bank loans and corporate bond financing negatively impact the FSE of GL firms, whereas equity and internal financing exert a significant positive effect. The study proposes corresponding policy recommendations, including enriching financing channels, improving the internal management of firms, and performing appropriate government functions.