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Demand Shock, Liquidity Management, and Firm Growth during the Financial Crisis
We examine the transmission of liquidity across the supply chain during the 2007-09 financial crisis, a period of financial market illiquidity, for a sample of unrated public firms with differential demand shocks. We measure differential demand by comparing firms that primarily supply to government customers with those that primarily supply to corporate customers. A difference-in-difference analysis shows little evidence that relatively high demand firms provide more or less liquidity to their own suppliers. The main determinant of the usage of short-term financing is a product market shock. ...
Supply Chain Disruptions and Inventory Dynamics
Firms appear to have moved away from a just-in-time inventory model to one that prioritizes resilience, as reflected in high levels of inventory holdings of intermediate inputs.
International Trade Dependence and Inventory Dynamics
US manufacturers that source their intermediate inputs from abroad have been more likely to increase their inventories in the aftermath of unexpected events and heightened uncertainty.
Inventory Mismatches Continue to Be Widespread
The pandemic spurred firms to stockpile inputs in an attempt to avoid the risks of just-in-time delivery. Yet inventory mismatches remain widespread. Why?
How do treasury dealers manage their positions?
Using thirty-one years of data (1990–2020) on U.S. Treasury dealer positions, we document a significant role for dealers in the intertemporal intermediation of new Treasury security supply. Dealers regularly take into inventory a large share of Treasury issuance so that dealer positions significantly increase during auction weeks. These inventory increases are only partially offset in adjacent weeks and are not significantly hedged with futures. Dealers seem to be compensated for the risk associated with these inventory changes by means of price appreciation in the subsequent week. In the ...