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High Speed Railway, Regional Development and Venture Capital Investment
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TitleHigh Speed Railway, Regional Development and Venture Capital Investment  
AuthorLong Yu, Zhao Hailong, Zhang Xinde and Li Yao  
OrganizationSchool of Finance, Shanghai University of Finance & Economics;PBC School of Finance, Tsinghua University;;, 
Key WordsHigh Speed Railway; Venture Capital; Regional Development; Information Asymmetry 
AbstractIn what aspects does the opening of high speed railway affect China’s economic development? Which kind of cities benefit most? Since venture capital investment provides a valuable angle to observe economic change and transformation, and the HSR effect changes the information constraints faced by venture capitalists, we take advantage of this quasi-natural experiment setting to depict the allocation change of venture capital nationwide. Our DID analysis shows that VC investment increase significantly in HSR cities compared with those comparable non-HSR cities, and this increase is significant within the one-hour circle around VC centers such as Beijing and Shanghai, etc. The effect is more significant in those HSR cities which have better ex-ante innovation basis, business friendliness and financial infrastructure. It has important implications for policy makers that they should improve the soft side of local infrastructure to attract resources such as VCs to improve growth and transformation of local economy. 
Serial NumberWP1155 
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