Corporate Liquidity During the Covid-19 Crisis: the Trade Credit Channel
Anne Duquerroy () and
Working papers from Banque de France
Using unique daily data on payment defaults to suppliers in France, we show how the trade credit channel amplified the Covid-19 shock, during the first months of the pandemic. It dramatically increased short-term liquidity needs in the most impacted downstream sectors: a one standard deviation increase in net trade credit position leads to a rise in the probability of default of up to a third. This effect is short-term and cyclical and is concentrated on financially constrained firms. We argue that taking into account the trade credit channel is critical to properly quantify liquidity shortfalls in crisis times.
Keywords: Firm; Corporate Finance; Trade Credit; Liquidity; Payment Default; Covid-19; Lockdown; Pandemic (search for similar items in EconPapers)
JEL-codes: E32 G32 G33 H12 H32 (search for similar items in EconPapers)
Pages: 57 pages
New Economics Papers: this item is included in nep-cfn, nep-cwa, nep-mac and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:851
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