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Production and Financial Networks in Interplay: Crisis Evidence from Supplier-Customer and Credit Registers

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URI: https://hdl.handle.net/10016/43952
ISSN: 2340-5031
UXXI: DT/0000002145
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2024-06-06
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We show that bank credit shocks to firms propagate upstream and downstream along the production network, with stronger effects for upstream than downstream propagation. Our identification strategy relies on: (i) administrative datasets from Spain on supplier-customer transactions and bank loans; (ii) a standard operationalization of bank credit-supply shocks during the Global Financial Crisis; and (iii) a general equilibrium model of an interfirm production network economy with financial frictions that is structurally estimated. Our results indicate that the network propagation leads to a 50% increase in the aggregate effects of bank credit supply shocks on GDP growth, with equally important first-order versus higher-order network effects.
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Supply Chains, Shock Propagation, Credit Supply, Real Effects Of Finance.
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DE - Working Papers. Economics. WE