Green fiscal policy and firms’ investment efficiency: New insights into firm-level panel data from the renewable energy industry in China

Abstract This article measures renewable energy firm-level pure technical efficiency, scale efficiency and total investment efficiency from micro input-output factors using Banker, Charnes and Cooper’s (BCC) data envelopment analysis (DEA) approach; its main novelty is that it clearly explores the effective impacts of government subsidies and tax rebate policies on renewable energy firms’ investment efficiency, using China’s renewable energy firm-level panel data. Our empirical results demonstrate that the overall level of total investment efficiency from renewable energy firms first increased gradually and then decreased in the period from 2010 to 2017, renewable energy firms showed greater ranges in total investment efficiency and scale efficiency, their averages of pure technical efficiency are all greater than 0.9000. Current government subsidies and taxation rebates have significantly positive influences on pure technical efficiency and total investment efficiency at the 10% confidence level; also, government subsidies generate greater positive impacts on total investment efficiency and pure technical efficiency than taxation rebates. Moreover, firms’ ownership concentrations significantly promote pure technical efficiency, scale efficiency and total investment efficiency of renewable energy firms, the returns of assets can significantly improve their overall level of total investment efficiency and pure technical efficiency.