Post by Sapphire Capital on Jul 19, 2008 22:05:53 GMT 4
Credit Chains and Sectoral Comovement: Does the Use of Trade Credit Amplify Sectoral Shocks?
CLAUDIO E. RADDATZ
World Bank
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February 1, 2008
World Bank Policy Research Working Paper No. 4525
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.
papers.ssrn.com/sol3/Delivery.cfm/4525.pdf?abstractid=1096848&mirid=4
CLAUDIO E. RADDATZ
World Bank
--------------------------------------------------------------------------------
February 1, 2008
World Bank Policy Research Working Paper No. 4525
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.
papers.ssrn.com/sol3/Delivery.cfm/4525.pdf?abstractid=1096848&mirid=4