Trade Credit and the Transmission of Unconventional Monetary Policy

65 Pages Posted: 5 May 2020 Last revised: 23 Jan 2023

See all articles by Manuel Adelino

Manuel Adelino

Duke University; Duke Innovation & Entrepreneurship Initiative; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Nova School of Business and Economics

Miguel A. Ferreira

Nova School of Business and Economics; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Pedro Pires

Nova School of Business and Economics

Multiple version iconThere are 4 versions of this paper

Date Written: May 2020

Abstract

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.

Suggested Citation

Adelino, Manuel and Ferreira, Miguel Almeida and Giannetti, Mariassunta and Pires, Pedro M., Trade Credit and the Transmission of Unconventional Monetary Policy (May 2020). NBER Working Paper No. w27077, Available at SSRN: https://ssrn.com/abstract=3592155

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National Bureau of Economic Research (NBER) ( email )

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Nova School of Business and Economics ( email )

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Miguel Almeida Ferreira

Nova School of Business and Economics ( email )

Campus de Carcavelos
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European Corporate Governance Institute (ECGI) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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Mariassunta Giannetti

Stockholm School of Economics ( email )

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Swedish House of Finance ( email )

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111 60 Stockholm
Sweden

Pedro M. Pires

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

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