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The ripple effect: supply chain reconfigurations and cross-border credit dynamics

Author

Listed:
  • Ricardo Correa
  • Andrea Fabiani
  • Matias Ossandon Busch
  • Miguel Sarmiento

Abstract

We study the role that cross-border firm-to-firm credit plays in financing exporters. Exploiting the exogenous shock of US tariffs on Chinese goods in 2018–2019, we examine the response of Colombian firms – bystanders not targeted by trade policy – to redirected US demand. Using credit registry information for cross-border and domestic non-financial firm financing, we find that almost 40 percent of the total credit sourced by exporters came from cross-border firm-to-firm credit at end-2019, which represented 80 percent of their cross-border credit. In contrast to traditional trade credit, which is typically short-term, firm-to-firm credit has an average maturity of almost 2 years, and has characteristics resembling bank lending. Our findings highlight an overlooked financial channel underpinning the international trade network.

Suggested Citation

  • Ricardo Correa & Andrea Fabiani & Matias Ossandon Busch & Miguel Sarmiento, 2025. "The ripple effect: supply chain reconfigurations and cross-border credit dynamics," BIS Working Papers 1315, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1315
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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