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    Credit Chain and Sectoral Comovement: A Multi-Region Investigation

    Lee, Hsiao-Hui; Yang, S. Alex; Zhang, Yuxuan; Kim, Kijin | January 0010
    Abstract
    This paper empirically examines how sectoral comovements are correlated with trade credit usage in a multi-region setting. Extending the models in Shea (2002) and Raddatz (2010), we develop a framework that captures the impact of trade credit usage on comovement between sectors within an economy and across economies separately. Using the Multi-Regional Input-Output Table developed by the Asian Development Bank, we assemble a dataset consisting of 14 manufacturing industries for 53 economies. We provide empirical evidence that trade credit linkage is an influential channel for both the domestic and cross-border shocks to propagate and create a more profound impact on industries around the globe. We find that the impact of domestic credit chains on sectoral comovement is twice as strong as that of the international ones. We further examine the time trend of this relationship and find that, from 2000 to 2018, the positive relationship between the intensity of trade credit usage and sectoral correlation decreases. We posit that this could be due to more diversified global trade pattern changes during these two decades.
    Citation
    Lee, Hsiao-Hui; Yang, S. Alex; Zhang, Yuxuan; Kim, Kijin. 0010. Credit Chain and Sectoral Comovement: A Multi-Region Investigation. © Asian Development Bank. http://hdl.handle.net/11540/14222. License: CC BY 3.0 IGO.
    ISSN
    2313-6537 (print)
    2313-6545 (electronic)
    Keywords
    Project Evaluation & Review Technique
    Operations Evaluation
    Evaluation
    World Trade
    Trade Volume
    Trade Promotion
    Trade Flows
    Trade Development
    Patterns Of Trade
    Trade credit
    Resources evaluation
    Input output analysis
    Import volume
    Export volume
    Export Development
    Economic agreements
    International market
    Import policy
    Export policy
    Participatory monitoring and evaluation
    Participative management
    Foreign trade routes
    Trade routes
    Foreign trade and employment
    Tariffs
    Value chain
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    Citable URI
    http://hdl.handle.net/11540/14222
    Metadata
    Show full item record
    Thumbnail
    ewp-640-credit-chain-sectoral-comovement.pdf (1015.Kb)
    Author
    Lee, Hsiao-Hui
    Yang, S. Alex
    Zhang, Yuxuan
    Kim, Kijin
    Theme
    Evaluation
    Trade
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise