Publication: Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?
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Date
2008-02
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Published
2008-02
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Abstract
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.
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“Raddatz, Claudio. 2008. Credit Chains and Sectoral Comovement : Does the Use of Trade Credit Amplify Sectoral Shocks?. Policy Research Working Paper; No. 4525. © World Bank. http://hdl.handle.net/10986/6414 License: CC BY 3.0 IGO.”
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