Patient capital and green total factor productivity: Evidence from Chinese listed companies

This study applies Fisher's investment framework to investigate how patient capital affects firms' green total factor productivity (GTFP). Using panel data from Chinese listed companies over the period 2008-2023, we measure firm-level GTFP by employing a non-radial SBM directional distance function combined with the Malmquist-Luenberger productivity index. Our analysis, based on two-way fixed-effects models and instrumental variable regressions, reveals that an increase in patient capital significantly enhances firms' green total factor productivity. Mechanism analysis indicates that this improvement arises from reduced financing costs as well as increased green R&D investment. Furthermore, the positive impact is particularly pronounced among small and medium-sized enterprises, non-state-owned firms, and pollution-intensive industries. The findings suggest that encouraging the transition from short-term speculative capital toward long-term patient capital can effectively improve firms' environmental efficiency. Thus, policy efforts should be directed towards expanding the supply of patient capital to promote corporate sustainability and accelerate the low-carbon economic transition without compromising economic efficiency.