2020 journal article
The trade credit channel and monetary policy transmission: Empirical evidence from US panel data
QUARTERLY REVIEW OF ECONOMICS AND FINANCE, 78, 226–250.
author keywords: Trade credit; Monetary policy; Corporate finance; Credit cycle; Credit rationing
open access via mpra.ub.uni-muenchen.de (repository)
Source: Web Of Science
Added: January 19, 2021
We investigate the US trade credit channel proposed by Meltzer (1960). We estimate reduced-form trade credit supply and demand models on quarterly firm-level data for most public corporations from 1988 to 2007. We use a novel method of distinguishing firms by access to funds using the indexes of Whited and Wu (2006) and Altman (1968). Tight monetary policy produced greater expansion of receivables than payables, expansion of receivables that varied by funds-access, and some expansion of payables by firms with poor access. Tight policy produced expansion of net trade credit by corporations which flowed to entities like private businesses, a major component of the channel.