IDEAS home Printed from https://ideas.repec.org/p/sap/wpaper/wp278.html

Financial and Production Integration in the Macroeconomy

Author

Listed:
  • Emanuele Brancati
  • Qingqing Cao
  • Raoul Minetti
  • Nicholas Jaehyun Yi

Abstract

We study how the integration between the financial sector and the production structure influences business cycle transmission. In a dynamic economy where banks provide assetbased finance to supply chains, we find that integration along an extensive margin, in the form of firms’ ability to borrow from banks specialized in different supply chain segments, amplifies negative banking shocks. In contrast, integration along an intensive margin, in the form of greater diffusion of bank factoring and invoice discounting, mitigates the transmission of banking shocks. A quantitative application to Italy reveals that the destabilizing effects of bank-supply chain integration can prevail when inter-firm commercial linkages are underdeveloped. The predictions are consistent with bank-firm matched data from Italy.

Suggested Citation

  • Emanuele Brancati & Qingqing Cao & Raoul Minetti & Nicholas Jaehyun Yi, 2026. "Financial and Production Integration in the Macroeconomy," Working Papers in Public Economics 278, Department of Economics and Law, Sapienza University of Rome.
    • Handle: RePEc:sap:wpaper:wp278
    as

    Download full text from publisher

    File URL: https://www.dipecodir.it/wpsap/data/wp278.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sap:wpaper:wp278. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Luisa Giuriato (email available below). General contact details of provider: https://ecodir.web.uniroma1.it/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.