Micro Mechanisms Driving China's Clean Energy Flourish: Business Expansion and Financing

Abstract

The elucidation of the correlation between corporate behavior and capital constraints holds particular significance in comprehending the progression of emerging industries. Using the business data of China's listed clean energy companies, we explore the relationship between clean energy business expansion and capital constraints. Empirical results indicate that the increment of clean energy business significantly mitigates capital constraints, whereas the stock of clean energy business does not yield such an effect. Furthermore, the underlying microscopic mechanisms are unveiled through a comparative analysis of emerging industries, industrial chain links, and financing channels. Specifically, the financing effect of the incremental clean energy business is likely to stem from China's distinctive industrial policy, while the financial market further engenders a “signal amplification” phenomenon in this regard.