Trade credit, sovereign risk and monetary policy in Europe

María Cantero Sáiz, Sergio Sanfilippo Azofra, Begoña Torre Olmo and Carlos López Gutiérrez

International Review of Economics & Finance, 2017, vol. 52, issue C, 39-54

Abstract: The purpose of this article is to analyze how sovereign risk influences the use of trade credit, both directly and through monetary policy. In addition, we test whether these effects differ during the crisis as compared to before the crisis. Using a sample of 45,864 Eurozone firms (2005–2012), we find that trade credit received increases when sovereign risk becomes higher, but only before the crisis. However, during the crisis, trade credit supply decreases as sovereign risk increases. Additionally, monetary restrictions only lead to an increase in trade credit in low or moderate sovereign risk countries.

Keywords: Trade credit; Sovereign risk; Monetary policy (search for similar items in EconPapers)
JEL-codes: E44 E52 G32 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:52:y:2017:i:c:p:39-54

DOI: 10.1016/j.iref.2017.09.010

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