Research on the Impact of Fiscal Vertical Imbalance on the Green Total Factor Productivity of Enterprises

The institutional environment constitutes the external foundation for corporate development. In the process of China’s modernization, addressing the fiscal constraints on corporate green development is a key issue in advancing the green transformation of the economy, as well as a new approach to understanding the implementation gaps in environmental regulations and the challenges facing the development of green finance. This paper draws on new institutional economics theory to construct an analytical framework of “institutional incentives-behavioural choices-performance outcomes.” Using unbalanced panel data from 2008 to 2022 on listed companies in the Shanghai and Shenzhen A-share markets and prefecture-level cities, a two-way fixed effects model is employed to systematically examine the impact of fiscal vertical imbalances on the efficiency of corporate green development. Heterogeneity analysis reveals the ‘institutional sensitivity gradient’ phenomenon, with the inhibitory effects of fiscal vertical imbalances being particularly pronounced among institutionally sensitive groups such as labour and capital-intensive enterprises, heavily polluting enterprises, mature and declining stage enterprises, and eastern coastal enterprises. Fiscal vertical imbalances severely constrain the pace of green transformation in traditional enterprises and the growth of green industries. It is necessary to reconfigure the central-local fiscal relationship oriented toward green development, innovate ecological compensation and green debt coordination mechanisms, and establish an incentive-compatible institutional environment to resolve the “green paradox.”