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

Chenran Liu, Chong Liu, Wenjing Peng and Wei Wang

Oxford Economic Papers, 2026, vol. 78, issue 1, 68-89

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.

Keywords: highway network; financial development; banks; industrial growth (search for similar items in EconPapers)
JEL-codes: G21 G28 O16 O18 (search for similar items in EconPapers)
Date: 2026
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