Economic Policy Uncertainty and Enterprise Financing Efficiency: Evidence from China

Abstract

This study investigates the effect of economic policy uncertainty on financing efficiency in China’s high-tech manufacturing industry from static and dynamic perspectives. Using data envelopment analysis (DEA) and the Malmquist index, we measure financing efficiency and its changes over time. The results show that China’s high-tech manufacturing firms exhibit low static financing efficiency, yet they exhibit relatively high dynamic efficiency. A significant positive relationship is found between economic policy uncertainty and both static and dynamic financing efficiency. The uncertainty motivates firms to improve their financing efficiency, mainly by enhancing technical and scale efficiency and by increasing comprehensive efficiency. Moreover, different financing channels, such as commercial credit, equity financing, bank credit, and internal financing, have varied effects on the relationship between economic policy uncertainty and static financing efficiency. This study demonstrates that high-tech manufacturing enterprises can respond to economic policy uncertainty by improving their financing efficiency.