Navigating the path to efficiency: how does the National Industry-Finance Cooperation Pilot policy shape enterprise total factor productivity in China?

China introduced the National Industry – Finance Cooperation Pilot (NIFCP) policy as a strategic initiative to strengthen the financial sector’s capacity and efficiency to serve the real economy. This study assesses how the NIFCP policy shapes enterprise total factor productivity (TFP) using a multi-period difference-in-differences (DID) methodology. The findings reveal the following. (1) The NIFCP policy significantly improves enterprise TFP. (2) Mechanism evaluation indicates that improvements in enterprise TFP are largely attributable to enhanced innovation capability and reduced agency costs. (3) Heterogeneity analyses indicate that beneficial impacts are more evident for non-state-owned enterprises, firms within high-competition industries, those situated in areas with higher financial development levels and cities with higher administrative hierarchies. In addition, the positive policy effect is stronger in the second pilot batch. This study provides practical guidance for optimizing the NIFCP policy design and supporting enterprises in their efforts to enhance TFP.