Information search costs and trade credit: evidence from high-speed rail connections

Huang, Haijie, Chen, Steven Xianglong ORCID: 0000-0003-0142-2654, Lee, Edward and Li, Dongdong (2023) Information search costs and trade credit: evidence from high-speed rail connections. EUROPEAN JOURNAL OF FINANCE, 30 (8). pp. 865-888.

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Official URL: http://dx.doi.org/10.1080/1351847x.2023.2241539

Abstract

We investigate the impact of information search costs on firms’ access to trade credit used as a major source of interfirm financing. Using the openings of high-speed rails (HSR) in China as exogenous shocks, we find that firms located in cities with HSR connections receive more trade credit from their suppliers. Further analyses show that the HSR effect on trade credit concentrates among customers with poor information transparency and that HSR openings improve the customers’ information environment, suggesting that a decline in information search costs promotes supplier financing. Our finding reveals a positive externality of HSR construction on interfirm financing.

Item Type:	Article
Uncontrolled Keywords:	Information search costs, soft information, trade credit, interfirm financing, supply chain financing, high-speed rail, >
Divisions:	Faculty of Humanities and Social Sciences > School of Management
Depositing User:	Symplectic Admin
Date Deposited:	28 Jul 2023 14:21
Last Modified:	08 Apr 2024 03:01
DOI:	10.1080/1351847X.2023.2241539
Related URLs:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3171966