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

June 1, 2003

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Yungsan Kim, and Woon Gyu Choi. Trade Credit and the Effect of Macro-Financial Shocks: Evidence From U.S. Panel Data, (USA: International Monetary Fund, 2003) accessed November 6, 2024

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.

Subject: Asset and liability management, Asset management, Bank credit, External debt, Government asset management, Labor, Monetary policy, Monetary tightening, Money, Public financial management (PFM), Trade credits, Wages

Keywords: Accounts payable, Accounts Receivable, AR-asset ratio, Asset management, Bank credit, C. accounts receivable regression, Credit Channel, E. net trade credit use regression, Firm level, Government asset management, High-quality firm, Monetary policy, Monetary tightening, Panel Data, Panel datum, Policy shock, Ratchet effect, Retained earnings, S&P firm, Short-term debt, Smaller firm, Trade Credit, Trade credits, View of trade credit, Wages, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/127
Stock No:

WPIEA1272003
ISBN:

9781451855005
ISSN:

1018-5941

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