Trade credit and the transmission of unconventional monetary policy

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

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

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 more trade credit to their customers. The increase in trade credit is more pronounced from core countries to periphery countries and for financially constrained customers. Customers increase investment and employment in response to the increase in trade financing, while 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.

Keywords: Monetary policy; Trade credit; Corporate bonds; Investment; Employment (search for similar items in EconPapers)
JEL-codes: E50 G30 (search for similar items in EconPapers)
Pages: 84 pages
Date: 2022
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://run.unl.pt/bitstream/10362/143364/1/WP650.pdf

Related works:
Journal Article: Trade Credit and the Transmission of Unconventional Monetary Policy (2023)
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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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp650

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