Credit Chain and Sectoral Comovement: A Multi-Region Investigation
Examining the impact of trade credit usage on comovement between sectors, this paper finds that trade credit linkage is an influential channel for domestic and cross-border shocks and can profoundly affect industries around the globe.
Global supply chains become increasingly interconnected via financial linkages such as trade credit, resulting in comovement across sectors and regions. Findings presented in this paper show that the impact of domestic credit chains on sectoral comovement is twice as strong as that of international ones.
- The Model
- Data and Variable Constructions
- Empirical Results
- Policy Implications and Conclusions