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Cross-Sector Interactions in Western Europe: Lessons From Trade Credit Data

Abstract : Large-scale analyses to map interactions between financial health at the sectoral level are still scarce. To fill the gap, in this paper, I map a network of predictive relationships across the financial health of several sectors. I provide a new advanced indicator to track propagation of financial distress across industries and countries on a monthly basis. I use defaults on trade credit as a measure of firms' worsening financial conditions in a sector. To control for omitted-variable bias, I apply a highdimensional VAR analysis, and isolate direct cross-sector causalities à la Granger from common exposure to macroeconomic shocks or to third-sector shock. I show that monitoring some key sectors-among which construction, wholesale and retail, or the automotive sector-can improve the detection of financial distress in other sectors. Finally, I find that those financial predictive relationships correlates with the input-output structure in the considered economies. Such structure of financial interactions reflect the propagation of financial distress along the supply chain.
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Preprints, Working Papers, ...
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Contributor : Elisabeth Lhuillier Connect in order to contact the contributor
Submitted on : Friday, May 13, 2022 - 4:21:23 PM
Last modification on : Tuesday, May 17, 2022 - 3:47:17 AM


WP 2022 - Nr 12.pdf
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  • HAL Id : hal-03667832, version 1



Mélina London. Cross-Sector Interactions in Western Europe: Lessons From Trade Credit Data. 2022. ⟨hal-03667832⟩



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