Munich Personal RePEc Archive

The trade credit channel and monetary policy transmission: empirical evidence from U.S. panel data

Altunok, Fatih and Mitchell, Karlyn and Pearce, Douglas (2015): The trade credit channel and monetary policy transmission: empirical evidence from U.S. panel data.

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Abstract

We investigate whether a trade credit channel mitigates monetary policy tightenings intended to slow economic activity. Unlike prior research, we study this issue using quarterly firm-level data for nearly the universe of non-financial public corporations and using more precise measures of their credit market access. We estimate firm-level models of the supply and demand for trade credit from 1988 to 2008. Our evidence suggests that policy tightenings evoke a flow of trade credit from public firms commensurate with their credit market access which goes primarily to private firms, a previously undocumented finding.

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