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Production and Financial Networks in Interplay: Crisis Evidence from Supplier-Customer and Credit Registers

Kenan Huremović, Gabriel Jiménez, Enrique Moral-Benito (), Jose-Luis Peydro () and Fernando Vega-Redondo

No 1191, Working Papers from Barcelona Graduate School of Economics

Abstract: We show that bank shocks originating in the financial sector propagate upstream and downstream along the production network and triple the impact of direct bank shocks. Our identification relies on the universe of both supplier-customer transactions and bank loans in Spain, a standard operationalization of credit-supply shocks during the 2008-09 global crisis, and the proposed theoretical framework. The impact on real effects is strong, and similarly so, when considering: (i) direct bank shocks to firms versus first-order interfirm contagion; (ii) first-order versus higher-order network effects; (iii) downstream versus upstream propagation; (iv) firm-specific versus economy-wide shocks. Market concentration amplifies these effects.

Keywords: Networks; supply chains; shock propagation; credit supply; real effects of finance (search for similar items in EconPapers)
JEL-codes: D85 E44 E51 G01 G21 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-mac
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Related works:
Working Paper: Production and financial networks in interplay: Crisis evidence from supplier-customer and credit registers (2020) Downloads
Working Paper: Production and financial networks in interplay: Crisis evidence from supplier-customer and credit registers (2020) Downloads
Working Paper: Production and financial networks in interplay: Crisis evidence from supplier-customer and credit registers (2020) Downloads
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