Firm-level trade credit responses to COVID-19-induced monetary and fiscal policies: International evidence

Ahmed Al-Hadi and Almukhtar Al-Abri

Research in International Business and Finance, 2022, vol. 60, issue C

Abstract: This paper provides preliminary evidence of the effects of fiscal and monetary policies designed to mitigate and contain the adverse economic impacts of COVID-19 on supplier-customer relationships during the first two quarters of 2020. We compare the impacts of various intervention policies on corporate trade credit for a sample of 14,623 firm-quarter observations, representing 56 countries, after controlling for quarter-, country-, industry-, and firm-fixed effects. We find that, overall, the monetary interventions are associated with lower levels of trade credit, while fiscal interventions increase the use of trade credit. Our results suggest that trade credit is lower in periods of less-restrictive bank credit. This finding has important policy implications for governments as they attempt to help financially constrained businesses survive the pandemic.

Keywords: Trade credit; COVID-19; Fiscal policy; Monetary policy; Non-conventional monetary policy; Economic crises (search for similar items in EconPapers)
JEL-codes: E50 E52 E62 E63 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:60:y:2022:i:c:s0275531921001896

DOI: 10.1016/j.ribaf.2021.101568

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