Published June 14, 2022
| Version v1
Journal article
Open
Replication package for "Dynamics of Trade Credit in China"
Authors/Creators
- 1. Shanghai University of Finance and Economics, Shanghai, China
- 2. University of Southern California, Los Angeles, USA
- 3. Zhejiang University, Hangzhou, China
- 4. Central University of Finance and Economics, Peking University, Beijing, China
Description
We use Chinese manufacturing data to show that upstream manufacturing industries received higher credit during the monetary expansion of 2005-2011. However, the higher credit received by upstream industries did not generate a similar increase in ‘trade lending’ to downstream industries, which limited the transmission of the credit expansion to the whole manufacturing sector. We develop a model that formalizes some of the key features of the Chinese economy and show why a credit expansion tilted toward the upstream sector may not fully cascade to the whole economy.