Economic System Entanglement on Intra-Firm Trade Portfolios: The Impact of Counterparty Credit Ratings on Business-to-Business Credit Dynamics

Marco Desogus and Elisa Casu

MPRA Paper from University Library of Munich, Germany

Abstract: In the last five years, Italy has seen a noticeable and steady increase in the supply of trade credit, granting of extensions, and general systemic business-to-business financial support. Focusing on system entanglement, this paper examines the impact in Italy of bank valuations of creditworthiness and credit intermediation on intra-firm trade portfolio dynamics. We further consider the impacts of exogenous shocks to the economy and other disruptive events on payment regularity and risks of insolvency in intra-firm transactions. Mapping portfolio dynamics to a quantum super-system with a Hamiltonian space of phases, we demonstrate that the performance of intra-firm portfolios depends concurrently on bank valuations and that system entanglement allows us to examine the extent to which economic disruptions shift portfolio dynamics from their state of equilibrium.

Keywords: system entanglement; intra-firm trade; portfolio dynamics; credit valuation (search for similar items in EconPapers)
JEL-codes: C02 C61 G24 H12 M21 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-bec and nep-fdg
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Published in International Mathematical Forum 3.16(2021): pp. 107-124

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:114364

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