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Infrastructure, financial access, and economic growth: evidence from a quasi-experiment in China

Author

Listed:
  • Chenran Liu
  • Chong Liu
  • Wenjing Peng
  • Wei Wang

Abstract

This article investigates the impact of transportation infrastructure projects on industrial growth and how the financial sector evolves accordingly to facilitate growth by leveraging a large-scale quasi-experiment that expands the highway network substantially in China. We find that the highway network improvements significantly promote county-level manufacturing value-added, especially for those industries with higher external financial dependence. Further analyses depict a previously neglected channel that road expansion induces geographical expansion of joint-equity commercial banks, which provide additional loans to financially constrained firms that grow by building up their leverage.

Suggested Citation

  • Chenran Liu & Chong Liu & Wenjing Peng & Wei Wang, 2026. "Infrastructure, financial access, and economic growth: evidence from a quasi-experiment in China," Oxford Economic Papers, Oxford University Press, vol. 78(1), pages 68-89.
    • Handle: RePEc:oup:oxecpp:v:78:y:2026:i:1:p:68-89.
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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