Elasticity of money in production networks, working capital, credit lines and financial conditions
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Wed 10 Jun 26
13:00 - 14:15
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Online
Zoom (email for link)
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Event speaker
Dr Ryan Banerjee
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Event type
Lectures, talks and seminars
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Event organiser
Essex Finance Centre
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Contact details
Dr Mehmet Furkan Karaca m.f.karaca@essex.ac.uk
The Essex Finance Centre (EFiC) warmly invites you to join the research seminar with Dr Ryan Banerjee from the Bank for International Settlements.
The elastic supply of money through overdrafts and credit lines overcomes cash-in-advance constraints, enabling large-value payments without waiting for incoming cash. This elasticity is crucial in long supply chains, where cash-in-advance constraints could otherwise cause gridlock.
In essence, money elasticity and the supply of working capital are two sides of the same coin, with undrawn credit lines serving as the operative link. This paper examines how shifts in financial conditions influence money elasticity and, in turn, impact firm activity within production networks. Using granular firm-level data, we demonstrate that production-network-driven working capital needs introduce a cyclical element that dances to the tune of financial conditions. Tighter conditions, such as rising credit spreads or a stronger US dollar, significantly reduce output, with spillovers through production networks amplifying the effects.
These findings underscore the importance of money elasticity in supporting economic stability.
Speaker
Ryan Banerjee is a Principal Economist in the Monetary and Economic Department at the Bank for International Settlements (BIS). His current research interests cover corporate finance and monetary policy. His research agenda on the growth and impact of zombie firms, corporate reallocation and inflation risks has attracted significant interest in policy circles as well as the media. Ryan's responsibilities have included preparing discussion papers for the BIS's bimonthly Global Economy Meeting of central bank Governors and as the secretary to various cross-central bank working groups.
Prior to joining the BIS in 2012, Ryan was a senior economist at the Bank of England, where his responsibilities included the quantitative easing programme and liquidity regulation. Ryan holds a PhD in economics from the University of Maryland, College Park. His work has been published in leading economics and finance journals.
