Trade Credit and the Monetary Transmission Mechanism

The Bank of England Working Paper No. 115

22 Pages Posted: 25 Sep 2000

See all articles by Marion Kohler

Marion Kohler

Bank for International Settlements (BIS)

Erik Britton

affiliation not provided to SSRN

Anthony Yates

Bank of England - Monetary Analysis

Date Written: 2000

Abstract

This paper investigates whether firms with direct access to capital markets 'help out' firms who are reliant on credit from banks by extending more trade credit when times are hard. Taking up a theme of Meltzer (1960) it asks, whether there is a 'trade credit channel' that offsets the bank credit channel more familiar to monetary economists. Using a panel of UK firms quoted on the UK stock exchange, we find that there is. This might explain why, to date, evidence on the bank credit channel has been equivocal.

Keywords: trade credit, monetary transmission mechanism, credit channel

JEL Classification: G32, E52, L14

Suggested Citation

Kohler, Marion and Britton, Erik and Yates, Anthony, Trade Credit and the Monetary Transmission Mechanism (2000). The Bank of England Working Paper No. 115, Available at SSRN: https://ssrn.com/abstract=234693 or http://dx.doi.org/10.2139/ssrn.234693

Marion Kohler (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Erik Britton

affiliation not provided to SSRN

Anthony Yates

Bank of England - Monetary Analysis ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

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