How does green finance improve the total factor energy efficiency? Capturing the mediating role of green management innovation and embodied technological progress

Improving enterprises' total factor energy efficiency (TFEE) is a critical way to solve energy shortage problems and environmental pollution and achieve the Paris Agreement targets. This study improves the double stochastic meta-frontier model, calculates the enterprises' TFEE based on the data from A-share listed industrial companies in China, uses the Bartik method to construct an instrumental variable at the city level, and carefully discriminates the impact of green finance (GF) on the enterprises' TFEE. It is found that GF contributed to the improvement of the TFEE in the sample period, and this conclusion is still valid after a series of robustness tests. Heterogeneity analysis shows that GF substantially promotes the energy efficiency of non-SOEs, cleaning industries and low-endowment regions. Mechanism analysis found that green management innovation, energy-embodied technological progress and capital-embodied technological progress play the role of mediators on the impact of GF on TFEE, and this mediating effect was heterogeneous across different types of enterprises, industries and cities. At present, capital-embodied technological progress plays the most significant mediating effect. This study has important practical significance for developing countries represented by China to steadily and orderly promote the “double carbon” work in the process of high-quality economic development, effectively improve TFEE, and consolidate the micro foundation of high-quality development.