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Topic
Trade Credit and the Transmission of Unconventional Monetary Policy
Resource type
Authors/contributors
- Adelino, Manuel (Author)
- Ferreira, Miguel A (Author)
- Giannetti, Mariassunta (Author)
- Pires, Pedro (Author)
Title
Trade Credit and the Transmission of Unconventional Monetary Policy
Abstract
We show that production networks are important for the transmission of unconventional monetary policy. Firms with bonds eligible for purchase under the European Central Bank’s Corporate Sector Purchase Program act as financial intermediaries by extending additional trade credit to their customers. The increase in trade credit is pronounced from core countries to periphery countries and for financially constrained customers. Customers then increase investment and employment in response to the increased trade financing, whereas suppliers expand their customer base, contributing to upstream industry concentration. Our findings suggest that trade credit redistributes the effects of monetary policy across regions and firms.
Publication
Review of Financial Studies
Volume
36
Issue
2
Pages
775-813
Date
2023
Citation
Adelino, M., Ferreira, M. A., Giannetti, M., & Pires, P. (2023). Trade Credit and the Transmission of Unconventional Monetary Policy. Review of Financial Studies, 36, 775–813.
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