Production and Financial Networks in Interplay: Crisis Evidence from Supplier-Customer and Credit Registers

Kenan Huremovic, Gabriel Jiménez, Enrique Moral Benito, Jose-Luis Peydro and Fernando Vega-Redondo

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We show that bank credit shocks to firms propagate upstream and downstream along the production network, with stronger effects for upstream than downstream propagation. Our identification strategy relies on: (i) administrative datasets from Spain on supplier-customer transactions and bank loans; (ii) a standard operationalization of bank credit-supply shocks during the Global Financial Crisis; and (iii) a general equilibrium model of an interfirm production network economy with financial frictions that is structurally estimated. Our results indicate that the network propagation leads to a 50% increase in the aggregate effects of bank credit supply shocks on GDP growth, with equally important first-order versus higher-order network effects.

Keywords: Supply; Chains; Shock; Propagation; Credit; Supply; Real; Effects; Of; Finance. (search for similar items in EconPapers)
Date: 2024-06-06
New Economics Papers: this item is included in nep-ban, nep-fdg and nep-net
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Production and Financial Networks in Interplay: Crisis Evidence from Supplier-Customer and Credit Registers (2020)
Working Paper: Production and financial networks in interplay: Crisis evidence from supplier-customer and credit registers (2020)
Working Paper: Production and financial networks in interplay: Crisis evidence from supplier-customer and credit registers (2020)
Working Paper: Production and financial networks in interplay: Crisis evidence from supplier-customer and credit registers (2020)
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