Raddatz, Claudio2012-05-252012-05-252008-02https://hdl.handle.net/10986/6414This 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.CC BY 3.0 IGOACCESS TO FINANCINGACCESS TO FORMAL FINANCEACCESS TO FUNDSACCOUNTINGACCOUNTS PAYABLEACCOUNTS PAYABLESACCOUNTS RECEIVABLEACCOUNTS RECEIVABLESADVERSE EFFECTAFFILIATED ORGANIZATIONSAMOUNT OF CREDITBALANCE SHEETBALANCE SHEETSBANK CREDITBANK DEBTBANK FINANCINGBANKRUPTCYBANKSBENCHMARKBIASESBORROWINGBUDGET CONSTRAINTBUSINESS CYCLEBUSINESS CYCLESCAPITAL FORMATIONCDCENTRAL BANKCHECKSCOMMODITYCONTRIBUTIONCREDIT CRUNCHCREDIT MARKETSCREDIT MECHANISMCREDITORSDEBTDEBTSDEFAULTSDEPENDENTDERIVATIVEDIRECT COSTDIVERSIFICATIONDOWN PAYMENTSECONOMIC ANALYSISECONOMIES OF SCALEENDOWMENTSENTREPRENEURENTREPRENEURSEQUALITYEXCLUSIONEXPORTSEXTERNAL FINANCINGFILING FOR BANKRUPTCYFINANCIAL ANALYSISFINANCIAL DEVELOPMENTFINANCIAL DIFFICULTIESFINANCIAL DISTRESSFINANCIAL HEALTHFINANCIAL INTERMEDIARIESFINANCIAL INTERMEDIARYFINANCIAL SYSTEMFINANCIAL SYSTEMSFORMAL BANKFORMAL CREDITFUTURE RESEARCHGDPGDP PER CAPITAGINI COEFFICIENTGROWTH RATEINCOMEINDIVIDUAL ENTREPRENEURSINFLATIONINFLATION RATESINTEREST RATEINTERNATIONAL BANKLATE PAYMENTLIMITED LIABILITYLIQUIDITYLIQUIDITY PROBLEMSLOW INCOMEMACROECONOMICSMONETARY POLICYNOMINAL VALUEPRICE INDEXPRIVATE CREDITPROBABILITYPRODUCTIVITIESPRODUCTIVITYPURCHASESREAL GDPRISK NEUTRALSALARIESSALESSHORT TERM DEBTSHORT-TERM DEBTSHORT-TERM FINANCINGSTATEMENTSUB-SAHARAN AFRICASUPPLY OF CREDITTOTAL COSTTOTAL REVENUETRADE CREDITTRADE CREDITORSVALUABLEVALUE ADDEDWAGESWEALTHWESTERN EUROPEWorld Bank10.1596/1813-9450-4525