Cross‐Border Renewable‐Energy Finance and Firm Energy‐Cost Efficiency

ABSTRACT Climate finance is central to the low‐carbon transition, yet firm‐level evidence on how cross‐border renewable‐energy finance relates to business performance remains limited. This study examines the association between international financial flows supporting renewable energy (IFFRE), tracked under Sustainable Development Goal (SDG) 7.a.1, and firm‐level energy‐cost efficiency (ECE) in developing economies. Using World Bank Enterprise Survey data matched with country‐year IFFRE data for 21 economies in Asia and Europe, the analysis focuses on cumulative IFFRE over the previous 3 years to reflect the multi‐year implementation horizon of renewable‐energy finance. The results show that cumulative IFFRE is positively and significantly associated with firm‐level ECE, measured as revenue generated per unit of energy cost. Suggestive pathway‐as‐outcome evidence indicates that cumulative IFFRE is associated with higher firm R&D spending and greater bank financing of fixed assets. Contextual heterogeneity analysis further shows that the IFFRE–ECE association is stronger in countries with deeper financial market access, stronger regulatory quality, and higher climate change readiness. The findings highlight the firm‐level relevance of renewable‐energy finance.