Credit Market Disruptions and Liquidity Spillover Effects in the Supply Chain
Bibliographic Data
| ID | 10178290 |
|---|---|
| Authors | Anna M Costello (University of Michigan, corresponding author) |
| Year | 2020 |
| Volume | 128 |
| Issue | 9 |
| Pages | 3434-3468 |
| Publication date | 2020-02-24 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/708736 |
| OpenAlex | W2960174596 |
| Language | EN |
| Citations received | 9 |
| References cited | 29 |
How do shocks to the banking sector travel through the corporate economy? Using a novel data set of interfirm sales, I show that suppliers exposed to a large and exogenous decline in bank financing pass this liquidity shock to their downstream customers. The spillover effect occurs through two channels: a reduction in trade credit offered and a reduction in the total supply of goods and services. After exposure to the spillover, downstream customers show a spike in credit risk and a reduction in employment. Overall, the paper highlights the importance of financial spillovers in explaining corporate sector outcomes
Business · Downstream (manufacturing · Economics · Financial system · Market liquidity · Microeconomics · Monetary economics · Shock (circulatory · Spillover effect · Supply chain · Banking stability, regulation, efficiency · Corporate Finance and Governance · Finance · Working Capital and Financial Performance
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| Citations per year | 2.25 |
|---|---|
| Citation span | 2022 - 2026 (5) |
| Highly cited | No |