Trade Credit in the Product Market Network

We document that industry positions in the product market network – a feature exogenous to individual firms – significantly influences firms' use and extension of trade credit. Specifically, firms in higher centrality customer industries use more trade credit and firms in higher centrality supplier industries provide less trade credit than other firms. These results are robust to controlling for other industry features including direct trade connections and product specificity. The evidence from examining the interest rates of accounts receivable and two negative liquidity shocks suggests that central industries' high likelihood to propagate liquidity shocks grants them advantages in trade credit negotiations