US Monetary Policy Spillovers to Emerging Markets: the Trade Credit Channel
Mélina London and
Working papers from Banque de France
We analyze the effects of exogenous US monetary policy shocks on trade credit towards emerging markets, using a proprietary database on trade credit amounts. We show that a US monetary tightening leads to an increase in foreign-supplied trade credit in Mexico. Thanks to the granularity of our database, we are able to identify a stronger effect for trade credit in USD and trade credit to sectors with low export orientation. This effect is even larger for low-quality buyers, subject to larger financial constraints. In this latter case, distinguishing between the intensive and extensive margins, we show that the use of trade credit as a substitute only holds in a context of pre-existing relationships. This emphasizes the substitution role of trade credit when global financial conditions tighten due to US monetary policy shocks.
Keywords: US Monetary Policy; Spillovers; Capital Flows; Emerging Market; Trade Credit (search for similar items in EconPapers)
JEL-codes: E52 F14 F40 F44 L14 (search for similar items in EconPapers)
Pages: 41 pages
New Economics Papers: this item is included in nep-cba and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://publications.banque-france.fr/sites/defaul ... ocuments/wp915_0.pdf
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:915
Access Statistics for this paper
More papers in Working papers from Banque de France Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS. Contact information at EDIRC.
Bibliographic data for series maintained by Michael brassart ().