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UID:150013739a184cebe11e6492bcd52ba2
CATEGORIES:Seminars
CREATED:20220908T153605
SUMMARY:Luigi Bocola - Stanford University, NBER
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Trade Credit and Financial Amplification” joint with G. Bornstein\nAbstract
 :\nIn most countries, suppliers of intermediate goods are also the main pro
 viders of short term financing to their customers via trade credit contract
 s. This paper builds a model where these inter-firm financial linkages aris
 e endogenously and uses it to understand how trade credit responds to finan
 cial shocks and affects their propagation. In the model, trade credit is th
 e outcome of a long-term contract between firms in a production line: downs
 tream firms have incentives to repay their debt when the relationship with 
 their supplier is valuable, and the higher is the value of such relationshi
 p the more trade credit the pair can sustain. In addition, production lines
  that can sustain more trade credit are better able to smooth the impact of
  financial shocks, provided that suppliers have enough borrowing capacity t
 hemselves. Using Italian data, we show that the model can rationalize the o
 bserved differences across industries in trade credit and in their performa
 nce during the Great Recession.\n\n\n \n
DTSTAMP:20260910T172439Z
DTSTART:20221215T143000Z
DTEND:20221215T160000Z
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TRANSP:OPAQUE
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