Monetary policy, implicit interest rate, and relative net trade credit

  1. Santiago Carbó-Valverde 3
  2. José Manuel Mansilla-Fernández 1
  3. Francisco Rodríguez-Fernández 2
  1. 1 University of Milan
    info

    University of Milan

    Milán, Italia

    ROR https://ror.org/00wjc7c48

  2. 2 Universidad de Granada
    info

    Universidad de Granada

    Granada, España

    ROR https://ror.org/04njjy449

  3. 3 Bangor Business School
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Revista:
Revista de economía aplicada

ISSN: 1133-455X

Any de publicació: 2017

Volum: 25

Número: 73

Pàgines: 21-54

Tipus: Article

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Altres publicacions en: Revista de economía aplicada

Resum

This paper investigates the effects of monetary policy on the implicit interest rate of trade credit as well as the probability of firms becoming net trade borrowers. We compute the implicit interest rate as the difference between the interest payments made to creditors and those received from debtors over the sum of both. Our results show that a tightening of monetary policy leads to: (i) increasing interest rates for trade credit, (ii) firms becoming trade borrowers, (iii) the generation of divergence in the cost of trade credit among firms in the same industrial sector, and (iv) the generation of a complementarity effect in prices between trade and bank financing.

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Informació de finançament

Financial support from MICINN-FEDER ECO2011-27954 and Junta de Andalucía and P08-SEJ-03781 (Excellence Groups) is gratefully acknowledged.

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