BIS Working Paper – Trade credit and exchange rate risk pass through
Author(s):Bryan Hardy, Felipe Saffie & Ina Simonovska Date:8 October 2024 Abstract: Large firms borrow in foreign currency and are net providers of trade credit to firms in their supply chains. We model the transmission of exchange rate risk via firm balance sheets along the supply chain. Trade credit loosens borrowing constraints and allows for higher production. Furthermore, firms[…]