Public information infrastructure and interfirm trade credit allocation: Evidence from China’s Golden Tax Project III

Public information infrastructure may affect credit relationships among firms as well as government regulation. Using the staggered rollout of China’s Golden Tax Project III as a quasi-natural experiment and National Tax Survey data from 2012–2020, this paper examines its effects on interfirm trade credit allocation. The estimates indicate that the reform increases trade credit obtained from upstream suppliers, reduces trade credit extended to downstream customers, and improves firms’ net trade credit positions. Additional analyses document changes in VAT-related measures of transaction-record consistency, tax compliance indicators, and contemporaneous cash-flow outcomes. These findings provide mechanism-related evidence consistent with transaction verifiability as a plausible explanatory channel. However, the empirical design cannot distinguish this explanation from tax enforcement deterrence or liquidity and working-capital constraints, nor establish their relative contributions. The cash-flow results are compatible with both feedback from trade credit adjustment and changes in liquidity conditions. The paper offers a conceptual perspective that focuses on verifiable transaction facts rather than broad information transparency. This conceptual precision does not imply causal mechanism identification. The findings extend research on digital tax administration to credit allocation between firms.