Trade credit helped amplify initial Covid-19 shock – BdF paper

Net borrowers of trade credit faced sharper liquidity squeeze, researchers find

The Banque de France

French firms’ trade credit positions significantly amplified the impact of the Covid-19 shock to liquidity, a working paper published by the Banque de France finds.

In Corporate liquidity during the Covid-19 crisis: the trade credit channel, Benjamin Bureau, Anne Duquerroy and Frédéric Vinas analyse a BdF dataset. This shows daily information on payment defaults to suppliers in France in 2019 and 2020.

Firms that were net borrowers of trade credit finance found this dependence “a source of

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