SEMINAR CANCELLED Production and Financial Networks in Interplay: Crisis Evidence from Supplier-Customer and Credit Registers

We show that bank shocks originating in the financial networks propagate upstream and downstream along the production network, thus greatly increasing the impact of bank shocks. Our identification relies on the proposed theoretical framework, the universe of both supplier-customer transactions and bank loans in Spain, and a standard operationalization of credit supply shocks applied to the 2008-09 global crisis. The overall impact is found to be strong and similarly so along the following alternative channels: (i) direct financial shocks versus network-based contagion; (ii) firm-specific shocks versus the common one; (iii) downstream versus upstream propagation; (iv) first- versus higher-order propagation. These effects are amplified by market concentration. Joint with Kenan Huremovic, Gabriel Jiménez, Enrique Moral-Benito, and Jose Luis Peydró.