Trade Credit and the Transmission of Unconventional Monetary Policy

Manuel Adelino, Miguel A Ferreira, Mariassunta Giannetti and Pedro Pires

The Review of Financial Studies, 2023, vol. 36, issue 2, 775-813

Abstract: We show that production networks are important for the transmission of unconventional monetary policy. Firms with bonds eligible for purchase under the European Central Bank’s Corporate Sector Purchase Program act as financial intermediaries by extending additional trade credit to their customers. The increase in trade credit is pronounced from core countries to periphery countries and for financially constrained customers. Customers then increase investment and employment in response to the increased trade financing, whereas suppliers expand their customer base, contributing to upstream industry concentration. Our findings suggest that trade credit redistributes the effects of monetary policy across regions and firms.

JEL-codes: E50 G30 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (7)

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