NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Trade Credit and the Transmission of Unconventional Monetary Policy

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

NBER Working Paper No. 27077
Issued in May 2020
NBER Program(s):Corporate Finance, Monetary Economics

We show that trade credit in production networks is important for the transmission of unconventional monetary policy. We find that firms with bonds eligible for purchase under the European Central Bank’s Corporate Sector Purchase Program act as financial intermediaries and extend more trade credit to their customers. The increase in trade credit flows is more pronounced from core countries to periphery countries and towards financially constrained customers. Customers increase investment and employment in response to the additional financing, while suppliers with eligible bonds increase their customer base, potentially favoring upstream industry concentration. Our findings suggest that the trade credit channel of monetary policy produces heterogeneous effects on regions, industries, and firms.

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Document Object Identifier (DOI): 10.3386/w27077

 
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