Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?

This paper provides evidence of the presence and relevance of a credit-chain amplification mechanism by looking at its implications for the correlation of industries. In particular, it tests the hypothesis that an increase in the use of trade-credi...

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Main Author:	Raddatz, Claudio
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO FINANCING ACCESS TO FORMAL FINANCE ACCESS TO FUNDS ACCOUNTING ACCOUNTS PAYABLE ACCOUNTS PAYABLES ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLES ADVERSE EFFECT AFFILIATED ORGANIZATIONS AMOUNT OF CREDIT BALANCE SHEET BALANCE SHEETS BANK CREDIT BANK DEBT BANK FINANCING BANKRUPTCY BANKS BENCHMARK BIASES BORROWING BUDGET CONSTRAINT BUSINESS CYCLE BUSINESS CYCLES CAPITAL FORMATION CD CENTRAL BANK CHECKS COMMODITY CONTRIBUTION CREDIT CRUNCH CREDIT MARKETS CREDIT MECHANISM CREDITORS DEBT DEBTS DEFAULTS DEPENDENT DERIVATIVE DIRECT COST DIVERSIFICATION DOWN PAYMENTS ECONOMIC ANALYSIS ECONOMIES OF SCALE ENDOWMENTS ENTREPRENEUR ENTREPRENEURS EQUALITY EXCLUSION EXPORTS EXTERNAL FINANCING FILING FOR BANKRUPTCY FINANCIAL ANALYSIS FINANCIAL DEVELOPMENT FINANCIAL DIFFICULTIES FINANCIAL DISTRESS FINANCIAL HEALTH FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY FINANCIAL SYSTEM FINANCIAL SYSTEMS FORMAL BANK FORMAL CREDIT FUTURE RESEARCH GDP GDP PER CAPITA GINI COEFFICIENT GROWTH RATE INCOME INDIVIDUAL ENTREPRENEURS INFLATION INFLATION RATES INTEREST RATE INTERNATIONAL BANK LATE PAYMENT LIMITED LIABILITY LIQUIDITY LIQUIDITY PROBLEMS LOW INCOME MACROECONOMICS MONETARY POLICY NOMINAL VALUE PRICE INDEX PRIVATE CREDIT PROBABILITY PRODUCTIVITIES PRODUCTIVITY PURCHASES REAL GDP RISK NEUTRAL SALARIES SALES SHORT TERM DEBT SHORT-TERM DEBT SHORT-TERM FINANCING STATEMENT SUB-SAHARAN AFRICA SUPPLY OF CREDIT TOTAL COST TOTAL REVENUE TRADE CREDIT TRADE CREDITORS VALUABLE VALUE ADDED WAGES WEALTH WESTERN EUROPE
Online Access:	http://documents.worldbank.org/curated/en/2008/02/9025045/credit-chains-sectoral-comovemen-t-use-trade-credit-amplify-sectoral-shocks http://hdl.handle.net/10986/6414

id	okr-10986-6414
recordtype	oai_dc
spelling	okr-10986-64142021-04-23T14:02:31Z Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks? Raddatz, Claudio ACCESS TO FINANCING ACCESS TO FORMAL FINANCE ACCESS TO FUNDS ACCOUNTING ACCOUNTS PAYABLE ACCOUNTS PAYABLES ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLES ADVERSE EFFECT AFFILIATED ORGANIZATIONS AMOUNT OF CREDIT BALANCE SHEET BALANCE SHEETS BANK CREDIT BANK DEBT BANK FINANCING BANKRUPTCY BANKS BENCHMARK BIASES BORROWING BUDGET CONSTRAINT BUSINESS CYCLE BUSINESS CYCLES CAPITAL FORMATION CD CENTRAL BANK CHECKS COMMODITY CONTRIBUTION CREDIT CRUNCH CREDIT MARKETS CREDIT MECHANISM CREDITORS DEBT DEBTS DEFAULTS DEPENDENT DERIVATIVE DIRECT COST DIVERSIFICATION DOWN PAYMENTS ECONOMIC ANALYSIS ECONOMIES OF SCALE ENDOWMENTS ENTREPRENEUR ENTREPRENEURS EQUALITY EXCLUSION EXPORTS EXTERNAL FINANCING FILING FOR BANKRUPTCY FINANCIAL ANALYSIS FINANCIAL DEVELOPMENT FINANCIAL DIFFICULTIES FINANCIAL DISTRESS FINANCIAL HEALTH FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY FINANCIAL SYSTEM FINANCIAL SYSTEMS FORMAL BANK FORMAL CREDIT FUTURE RESEARCH GDP GDP PER CAPITA GINI COEFFICIENT GROWTH RATE INCOME INDIVIDUAL ENTREPRENEURS INFLATION INFLATION RATES INTEREST RATE INTERNATIONAL BANK LATE PAYMENT LIMITED LIABILITY LIQUIDITY LIQUIDITY PROBLEMS LOW INCOME MACROECONOMICS MONETARY POLICY NOMINAL VALUE PRICE INDEX PRIVATE CREDIT PROBABILITY PRODUCTIVITIES PRODUCTIVITY PURCHASES REAL GDP RISK NEUTRAL SALARIES SALES SHORT TERM DEBT SHORT-TERM DEBT SHORT-TERM FINANCING STATEMENT SUB-SAHARAN AFRICA SUPPLY OF CREDIT TOTAL COST TOTAL REVENUE TRADE CREDIT TRADE CREDITORS VALUABLE VALUE ADDED WAGES WEALTH WESTERN EUROPE This paper provides evidence of the presence and relevance of a credit-chain amplification mechanism by looking at its implications for the correlation of industries. In particular, it tests the hypothesis that an increase in the use of trade-credit along the input-output chain linking two industries results in an increase in their correlation. The analysis uses detailed data on the correlations and input-output relations of 378 manufacturing industry-pairs across 44 countries with different degrees of use of trade credit. The results provide strong support for this hypothesis and indicate that the mechanism is quantitatively relevant. 2012-05-25T14:38:11Z 2012-05-25T14:38:11Z 2008-02 http://documents.worldbank.org/curated/en/2008/02/9025045/credit-chains-sectoral-comovemen-t-use-trade-credit-amplify-sectoral-shocks http://hdl.handle.net/10986/6414 English Policy Research Working Paper; No. 4525 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCESS TO FINANCING ACCESS TO FORMAL FINANCE ACCESS TO FUNDS ACCOUNTING ACCOUNTS PAYABLE ACCOUNTS PAYABLES ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLES ADVERSE EFFECT AFFILIATED ORGANIZATIONS AMOUNT OF CREDIT BALANCE SHEET BALANCE SHEETS BANK CREDIT BANK DEBT BANK FINANCING BANKRUPTCY BANKS BENCHMARK BIASES BORROWING BUDGET CONSTRAINT BUSINESS CYCLE BUSINESS CYCLES CAPITAL FORMATION CD CENTRAL BANK CHECKS COMMODITY CONTRIBUTION CREDIT CRUNCH CREDIT MARKETS CREDIT MECHANISM CREDITORS DEBT DEBTS DEFAULTS DEPENDENT DERIVATIVE DIRECT COST DIVERSIFICATION DOWN PAYMENTS ECONOMIC ANALYSIS ECONOMIES OF SCALE ENDOWMENTS ENTREPRENEUR ENTREPRENEURS EQUALITY EXCLUSION EXPORTS EXTERNAL FINANCING FILING FOR BANKRUPTCY FINANCIAL ANALYSIS FINANCIAL DEVELOPMENT FINANCIAL DIFFICULTIES FINANCIAL DISTRESS FINANCIAL HEALTH FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY FINANCIAL SYSTEM FINANCIAL SYSTEMS FORMAL BANK FORMAL CREDIT FUTURE RESEARCH GDP GDP PER CAPITA GINI COEFFICIENT GROWTH RATE INCOME INDIVIDUAL ENTREPRENEURS INFLATION INFLATION RATES INTEREST RATE INTERNATIONAL BANK LATE PAYMENT LIMITED LIABILITY LIQUIDITY LIQUIDITY PROBLEMS LOW INCOME MACROECONOMICS MONETARY POLICY NOMINAL VALUE PRICE INDEX PRIVATE CREDIT PROBABILITY PRODUCTIVITIES PRODUCTIVITY PURCHASES REAL GDP RISK NEUTRAL SALARIES SALES SHORT TERM DEBT SHORT-TERM DEBT SHORT-TERM FINANCING STATEMENT SUB-SAHARAN AFRICA SUPPLY OF CREDIT TOTAL COST TOTAL REVENUE TRADE CREDIT TRADE CREDITORS VALUABLE VALUE ADDED WAGES WEALTH WESTERN EUROPE
spellingShingle	ACCESS TO FINANCING ACCESS TO FORMAL FINANCE ACCESS TO FUNDS ACCOUNTING ACCOUNTS PAYABLE ACCOUNTS PAYABLES ACCOUNTS RECEIVABLE ACCOUNTS RECEIVABLES ADVERSE EFFECT AFFILIATED ORGANIZATIONS AMOUNT OF CREDIT BALANCE SHEET BALANCE SHEETS BANK CREDIT BANK DEBT BANK FINANCING BANKRUPTCY BANKS BENCHMARK BIASES BORROWING BUDGET CONSTRAINT BUSINESS CYCLE BUSINESS CYCLES CAPITAL FORMATION CD CENTRAL BANK CHECKS COMMODITY CONTRIBUTION CREDIT CRUNCH CREDIT MARKETS CREDIT MECHANISM CREDITORS DEBT DEBTS DEFAULTS DEPENDENT DERIVATIVE DIRECT COST DIVERSIFICATION DOWN PAYMENTS ECONOMIC ANALYSIS ECONOMIES OF SCALE ENDOWMENTS ENTREPRENEUR ENTREPRENEURS EQUALITY EXCLUSION EXPORTS EXTERNAL FINANCING FILING FOR BANKRUPTCY FINANCIAL ANALYSIS FINANCIAL DEVELOPMENT FINANCIAL DIFFICULTIES FINANCIAL DISTRESS FINANCIAL HEALTH FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY FINANCIAL SYSTEM FINANCIAL SYSTEMS FORMAL BANK FORMAL CREDIT FUTURE RESEARCH GDP GDP PER CAPITA GINI COEFFICIENT GROWTH RATE INCOME INDIVIDUAL ENTREPRENEURS INFLATION INFLATION RATES INTEREST RATE INTERNATIONAL BANK LATE PAYMENT LIMITED LIABILITY LIQUIDITY LIQUIDITY PROBLEMS LOW INCOME MACROECONOMICS MONETARY POLICY NOMINAL VALUE PRICE INDEX PRIVATE CREDIT PROBABILITY PRODUCTIVITIES PRODUCTIVITY PURCHASES REAL GDP RISK NEUTRAL SALARIES SALES SHORT TERM DEBT SHORT-TERM DEBT SHORT-TERM FINANCING STATEMENT SUB-SAHARAN AFRICA SUPPLY OF CREDIT TOTAL COST TOTAL REVENUE TRADE CREDIT TRADE CREDITORS VALUABLE VALUE ADDED WAGES WEALTH WESTERN EUROPE Raddatz, Claudio Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?
relation	Policy Research Working Paper; No. 4525
description	This paper provides evidence of the presence and relevance of a credit-chain amplification mechanism by looking at its implications for the correlation of industries. In particular, it tests the hypothesis that an increase in the use of trade-credit along the input-output chain linking two industries results in an increase in their correlation. The analysis uses detailed data on the correlations and input-output relations of 378 manufacturing industry-pairs across 44 countries with different degrees of use of trade credit. The results provide strong support for this hypothesis and indicate that the mechanism is quantitatively relevant.
format	Publications & Research :: Policy Research Working Paper
author	Raddatz, Claudio
author_facet	Raddatz, Claudio
author_sort	Raddatz, Claudio
title	Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?
title_short	Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?
title_full	Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?
title_fullStr	Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?
title_full_unstemmed	Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?
title_sort	credit chains and sectoral comovement : does the use of trade credit amplify sectoral shocks?
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2008/02/9025045/credit-chains-sectoral-comovemen-t-use-trade-credit-amplify-sectoral-shocks http://hdl.handle.net/10986/6414
_version_	1764400332244254720

Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?

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