Trade credit is an important source of finance for firms, but it has typically been excluded from the analysis of the credit channel. In this paper we examine a panel of 16,000 manufacturing firm records for the years 1990 through 1999. We show that the uptake of trade credit varies with the...

This paper investigates the role of trade credit in the transmission of monetary policy. Most models of the transmission mechanism allow the firm to access only financial markets or bank lending according to some net worth criterion. In our model we introduce trade credit as an additional source...