The ripple effect: supply chain reconfigurations and cross-border credit dynamics

Ricardo Correa, Andrea Fabiani, Matias Ossandon Busch and Miguel Sarmiento

No 1315, BIS Working Papers from Bank for International Settlements

Abstract: We study the role that cross-border firm-to-firm credit plays in financing exporters. Exploiting the exogenous shock of US tariffs on Chinese goods in 2018–2019, we examine the response of Colombian firms – bystanders not targeted by trade policy – to redirected US demand. Using credit registry information for cross-border and domestic non-financial firm financing, we find that almost 40 percent of the total credit sourced by exporters came from cross-border firm-to-firm credit at end-2019, which represented 80 percent of their cross-border credit. In contrast to traditional trade credit, which is typically short-term, firm-to-firm credit has an average maturity of almost 2 years, and has characteristics resembling bank lending. Our findings highlight an overlooked financial channel underpinning the international trade network.

Keywords: trade disruptions; cross-border credit; firm-to-firm credit; global value chains (search for similar items in EconPapers)
JEL-codes: F34 F42 G21 (search for similar items in EconPapers)
Date: 2025-12
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