TY - JOUR
T1 - Trade credit and the transmission of unconventional monetary policy
AU - Adelino, Manuel
AU - Ferreira, Miguel A.
AU - Giannetti, Mariassunta
AU - Pires, Pedro
N1 - Funding Information:
We thank Itay Goldstein (the editor), two anonymous referees, Fabio Feriozzi, Luc Laeven, Ali Ozdagli, Mitchell Petersen, Julien Sauvagnat, Rodney Ramcharan, and Philipp Schnabl; conference participants at the ECB-RFS Macro-Finance Conference, the European Finance Association Annual Meeting, the Financial Intermediation Research Society, the NBER Summer Institute Corporate Finance Meeting, the Stanford Institute for Theoretical Economics (SITE) Financial Regulation Conference, the Western Finance Association, the 17th Annual Conference on Corporate Finance at Washington University in St. Louis, and the Norges Bank Workshop on Frontier Research in Banking; and seminar participants at the Bank of Italy, BI Norwegian Business School, Carnegie Mellon University, Deutsche Bundesbank, Emory University/Federal Reserve Bank of Atlanta, Georgia Tech, Imperial College London, London Business School, Michigan State University, Oxford University, Singapore Management University, University of Florida, University of Illinois at Chicago, University of Illinois at Urbana–Champaign, University of Mannheim, and University of Maryland for helpful comments. Ferreira holds the BPI | Fundação “la Caixa” Chair in Responsible Finance, is an independent board member at BPI Asset Management, and acknowledges financial support from the Fundação para a Ciência e Tecnologia (FCT). Giannetti acknowledges financial support from the Bank of Sweden Tercentenary Foundation and the Jan Wallander and Tom Hedelius Foundation. Supplementary data can be found on The Review of Financial Studies web site. Send correspondence to Miguel Ferreira, [email protected].
Publisher Copyright:
© The Author(s) 2022. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved.
PY - 2023/2/1
Y1 - 2023/2/1
N2 - 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 additional trade credit to their customers. The increase in trade credit is pronounced from core countries to periphery countries and for financially constrained customers. Customers then increase investment and employment in response to the increased trade financing, whereas 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.
AB - 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 additional trade credit to their customers. The increase in trade credit is pronounced from core countries to periphery countries and for financially constrained customers. Customers then increase investment and employment in response to the increased trade financing, whereas 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.
KW - E50
KW - G30
UR - http://www.scopus.com/inward/record.url?scp=85148494027&partnerID=8YFLogxK
U2 - 10.1093/rfs/hhac040
DO - 10.1093/rfs/hhac040
M3 - Article
SN - 0893-9454
VL - 36
SP - 775
EP - 813
JO - Review Of Financial Studies
JF - Review Of Financial Studies
IS - 2
ER -