Trade Credit and the Effect of Macro-Financial Shocks: Evidence from U.S. Panel Data

Author/Editor: Choi, Woon Gyu ; Kim, Yungsan
Publication Date: June 01, 2003
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: Many studies examine why firms are financed by their suppliers, but few empirical studies look at the macroeconomic implications of such financial arrangements. Using disaggregated panel data, we examine how firms extend and use trade credit. We find that, controlling for the transactions or asset management motive, both accounts payable and receivable increase with tighter policy, implying that trade credit helps firms absorb the effect of a credit contraction. A comparison of S&P 500 firms with smaller firms, however, provides no evidence that when policy is tightened, large firms play the role of credit suppliers more actively than small firms.
Series: Working Paper No. 03/127
Subject(s): Trade | United States | Credit | Financial crisis | Monetary policy | Economic models

Author's Keyword(s): Trade credit | accounts payable | accounts receivable | monetary policy | credit channel | panel data
Publication Date: June 01, 2003
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA1272003 Pages: 34
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