Trade credit when interest rates rise
Trade credit appears on 112 recent papers, but only 3 of them carry an interest-rate or monetary-policy keyword. When bank credit gets dearer, firms lean on their suppliers and delay paying them. Does trade credit carry monetary tightening down the supply chain, and who ends up financing whom?
What prompted this#
Since October 2025, 112 papers carry a trade-credit, accounts-payable, supplier-credit or payment-terms keyword (68 in finance journals, 16 in operations research), with "trade credit" alone on 90. Of these, 28 also carry a financial-constraint, bank-credit, crisis or shock keyword. Only 3 mention interest rates or monetary easing, although "monetary policy transmission" appears on 119 papers elsewhere in the archive.
Questions#
- After the 2022–2023 rate rises, did large buyers lengthen their payment terms, and did their small suppliers borrow more from banks to fill the gap?
- Does trade credit soften monetary tightening for constrained firms (they borrow from suppliers) or pass it on to the weakest firm in the chain?
- Did payment-practice disclosure rules (UK, EU proposals) shorten payment terms, or only make them visible?
Data that could help#
Firm-level accounts payable and receivable (Compustat, Orbis, CSMAR), supplier–customer links, payment-practice reports and policy-rate changes.
Next step#
Compare the change in days payable of large firms with the change in days receivable and bank debt of their listed suppliers across the 2022–2023 tightening.