Abstract: Based on the improved LP method, this paper makes use of the data of China’s industrial enterprises from 2005 to 2007 to estimate the total factor productivity (TFP) of the enterprises in different industries. Then, it applies the generalized propensity score matching method (GPSM) to analyze the effect of the financing constraints from both internal and external sources on TFP, which is faced by state-owned enterprises, non state-owned enterprises and especially private enterprises. The result shows that to reduce the financing constraints from internal sources can significantly promote TFP in the enterprises of different natures; meanwhile, to reduce the financing constraints from external sources can also significantly promote the TFP in the non state-owned enterprises and private enterprises. However, as for most state-owned enterprises, to reduce financing constraints from external sources cannot obviously promote their TFP.

Key words: financing constraints; total factor productivity; the generalized propensity score matching method