The effect of economic policy uncertainty on enterprise total factor productivity based on financial mismatch: Evidence from China*

This study investigates the influence of economic policy uncertainty on total factor productivity (TFP) of enterprises. We find that economic policy uncertainty is significantly and negatively related to the TFP growth of enterprises in China. By distinguishing the nature of enterprise property rights and the scale of enterprises, we find that the reduction of the TFP growth of enterprises is more significant in non-state-owned enterprises and large-scale enterprises. Our analysis shows that economic policy uncertainty will reduce the TFP growth of enterprises by aggravating financial mismatch.

Automated summary

The study shows that economic policy uncertainty has a significantly negative impact on the total factor productivity (TFP) growth of enterprises in China, particularly for non-state-owned enterprises and large-scale enterprises. This impact is mainly due to exacerbating financial mismatch.