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Journal of Financial Intermediation Vol. 67 2026

Through the supply chains it may not transmit? A case of monetary policy bottlenecks

Frédéric Boissay1; Emilia Garcia-Appendini; Steven Ongena2,3,4,5

1 Bank for International Settlements · 2 University of Zurich · 3 Centre for Economic Policy Research · 4 Swiss Finance Institute · 5 KU Leuven

open access

Abstract

We investigate the transmission of monetary policy through the supply chains with US data on corporate linkages. Our analysis uncovers three key insights. First, contractionary monetary conditions lead to production disruptions in financially constrained rms. Second, these disruptions extend to the suppliers and customers of such firms. Third, disruptions intensify when financially constrained firms purchase or sell specialized goods. These findings suggest that monetary tightening creates bottlenecks in supply chains, forcing firms to curtail production when they cannot substitute their constrained business partners. \Monetary policy bottlenecks" amplify the impact ofmonetary policy beyond the standard balance sheet channel of transmission.

DOI
10.1016/j.jfi.2026.101221
Volume
67
Pages
101221
Language
en
Sources
openalex crossref

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