Oil price uncertainty and enterprise total factor productivity: Evidence from China

Global oil price uncertainty may affect the enterprise total factor productivity (TFP). Considering the unbalanced relationship between the rapid growth in the Chinese economy and its relatively low TFP and China is the largest net oil importer, this paper employs the SYS-GMM to effectively analyze...

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Bibliographic Details
Published in:International review of economics & finance 2023-01, Vol.83, p.201-218
Main Authors: Ren, Xiaohang, liu, Ziqing, Jin, Chenglu, Lin, Ruya
Format: Article
Language:English
Subjects:
Oil price uncertainty
Resource allocation
SYS-GMM
Technological innovation
Total factor productivity
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Summary:Global oil price uncertainty may affect the enterprise total factor productivity (TFP). Considering the unbalanced relationship between the rapid growth in the Chinese economy and its relatively low TFP and China is the largest net oil importer, this paper employs the SYS-GMM to effectively analyze the impact of oil price uncertainty on Chinese enterprise TFP, as well as its mechanism. Based on firm-level data of listed Chinese enterprises from 2010 to 2019, we find significant evidence that oil price shocks have a detrimental influence on enterprise TFP. This influence is mediated by technical innovation and resource allocation. Heterogeneity analysis reveals that oil price uncertainty has a stronger negative impact on enterprise TFP state-owned firms, or firms in small businesses, secondary industries, northeastern heavy industries, low-competition sectors, and regions where marketization is sluggish. Moreover, when the control of retail oil prices is eased, the negative impact becomes more evident. Our findings can provide advice on policies or to researchers regarding the considerable uncertainty of energy prices and increasingly importance of TFP. •The impact of oil price uncertainty on enterprise total factor productivity (TFP) is assessed.•Oil price uncertainty can lead to a decline in enterprise TFP.•Technological innovation and resource allocation are two mediating variables between the relationship of oil price uncertainty and TFP.•The extent to which oil price uncertainty affects enterprise TFP varies in the enterprise's internal and external environments.
ISSN:1059-0560
1873-8036
DOI:10.1016/j.iref.2022.08.024