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Trade credit and the monetary transmission mechanism

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  • Marion Kohler
  • Erik Britton
  • Tony Yates

Abstract

This paper investigates whether firms with direct access to capital markets 'help out' firms who are reliant on credit from banks by extending more trade credit when times are hard. In other words, is there a 'trade credit channel' that offsets the bank credit channel more familiar to monetary economists? Using a panel of UK firms quoted on the UK stock exchange it is found that there is. This might explain why, to date, evidence on the bank credit channel has been equivocal.

Suggested Citation

  • Marion Kohler & Erik Britton & Tony Yates, 2000. "Trade credit and the monetary transmission mechanism," Bank of England working papers 115, Bank of England.
  • Handle: RePEc:boe:boeewp:115
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    File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/2000/wp115.pdf
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    References listed on IDEAS

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