Digital financial inclusion, environment volatility and investment efficiency: demand and supply side experiences of Chinese listed renewable energy firms

Enhancing the investment efficiency of renewable energy firms is vital for the low-carbon energy transition and addressing climate change. However, the impact of digital financial inclusion on this process remains uncertain. This study employs panel data from 113 listed Chinese renewable energy firms from 2011 to 2020, with a two-stage Systematic GMM dynamic panel model to investigate the impact and underlying mechanisms of digital financial inclusion on the investment efficiency of renewable energy firms. In addition, the moderating role of environmental volatility is also examined. It is found that digital financial inclusion significantly improves the investment efficiency of renewable energy firms, with a more pronounced effect observed among non-state-owned firms and those located in the Southern region. The mechanism analysis shows that it improves renewable energy firms' investment efficiency by reducing financing costs and increasing R&D expenditures, but it fails to incentivize these firms by promote consumption upgrading. Moreover, different external environmental volatility has different moderating effects. Notably, the continual rise in extreme temperatures reduces the operational efficiency of equipment and weakens the incentives for digital financial inclusion. Therefore, decision makers should promote demand-driven growth and seize market investment opportunities in occasions of environment volatility.