Trade Credit and the Transmission of Unconventional Monetary Policy

Miguel Ferreira, Manuel Adelino, Mariassunta Giannetti and Pedro Pires

No 14639, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We show that trade credit in production networks is important for the transmission of unconventional monetary policy. We find that firms with bonds eligible for purchase under the European Central Bank’s Corporate Sector Purchase Program act as financial intermediaries and extend more trade credit to their customers. The increase in trade credit flows is more pronounced from core countries to periphery countries and towards financially constrained customers. Customers increase investment and employment in response to the additional financing, while suppliers with eligible bonds increase their customer base, potentially favoring upstream industry concentration. Our findings suggest that the trade credit channel of monetary policy produces heterogeneous effects on regions, industries, and firms.

Keywords: Monetary policy; Trade credit; Corporate bonds; investment; Employment (search for similar items in EconPapers)
JEL-codes: E50 G30 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-eec and nep-mac
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Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Trade Credit and the Transmission of Unconventional Monetary Policy (2023)
Working Paper: Trade credit and the transmission of unconventional monetary policy (2022)
Working Paper: Trade Credit and the Transmission of Unconventional Monetary Policy (2020)
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