Recently, an increasing number of papers have investigated the role of trade credit as an external source of finance when analyzing the monetary transmission mechanism. These works support the balance sheet-channel view and at the same time explain the difficulties encountered when looking for...

We show that production networks are important for the transmission of unconventional monetary policy. Firms with bonds eligible for purchase under the European Central Bank’s Corporate Sector Purchase Program act as financial intermediaries by extending more trade credit to their customers....

Using unique daily data on payment defaults to suppliers in France, we show how the trade credit channel amplified the Covid-19 shock, during the first months of the pandemic. It dramatically increased short-term liquidity needs in the most impacted downstream sectors: a one standard deviation...