High Speed Railway And Trade Credit Extension

This paper exploits the open of China's High-Speed Railway(HSR)during 2008-2016 as an exogenous quasi-experimental variation in motivation of product quality guarantees to examine how the HSR affect the company's trade credit supply decisions.The open of HSR can reduce the degree of information asymmetry as well as prompt the company to improve product quality by increasing the transaction between the firm and its customers,which lead to a decrease in motivation of the company to provide trade credit for product quality guarantees.The result of the difference-in-differences estimation shows that the open of HSR has reduced the company's trade credit supply by about 3.39%.And its impact channel is through the increase of the corporate transaction volume.Further support is found in stronger treatment effects among firms with ex ante greater information asymmetry,more relation-specific investment and lower requirement for product quality guarantees The results in this paper provide further supplements and developments for the product quality guarantees theory of trade credit.Next,the paper also carries out a series of robustness tests such as parallel trend test,placebo test,matching control group using propensity score matching method to enhance the reliability of quasi-natural experiments,and excluded the alternative explanation for the rapid development of civil aviation industry.Finally,this paper examines the economic consequences of the open of high-speed railway.The results in this paper provide further supplements and developments for the product quality guarantees theory of trade credit.The conclusions are of some enlightenment for understanding the economic effect of transportation infrastructure and the influencing factors of the company's trade credit supply decision-making.