Topic: Cyclical Dynamics of Trade Credit with Production Networks

Time: 12:30-14:00,May 8, 2019

Venue:Room 302, the Main Building in the East side of Shahe Campus of CUFE

Moderator:Assistant Professor Gu JIN, School of Finance at CUFE

Speaker:Junjie XIA, Assistant Professor of Institute of New Structural Economics atPeking University, graduated from University of Southern California in 2017. Hemainly researches in macroeconomic, finance, international trade, and nowfocuses in the research subjects such as trade credit and production structurenetwork, resource misallocation and dynamic analysis of export,automation--industrial upgrading and labor force structure, skill premium,income distribution and wealth inequality, industrial policy and park economy.

Abstract: Weshow that in production and trade networks that characterize the Chineseeconomy there is an externality that (inefficiently) reduces the supply oftrade credit from upstream firms to downstream firms. Since a credit expansionaffects more directly firms in upstream industries (due to their closerconnection with banks), the credit expansion does not fully propagate todownstream firms through trade credit because of the externality. Manufacturingindustry data for the period 2005-2016 supports the theoretical findings. Inparticular, we observe that during the credit expansion period of 2005-2011,the higher growth of credit received by upstream manufacturing industries wasnot accompanied by a similar growth of trade lending to downstream industries.