Factoring and the Transmission of Monetary Policy

Abstract

We document that factoring—the sale of invoices for immediate cash—is an important source of short-term financing for Chilean firms, especially small ones. Whether factoring mitigates or amplifies the contraction in bank credit that follows a monetary tightening is an open question for policymakers. We study it by estimating local projections of the prices and quantities of bank credit and factoring on monetary policy surprises. We use two transaction-level administrative datasets for 2016–2024: bank loan originations from the Financial Market Commission (CMF), Chile’s financial regulator, which report the interest rate, amount, and maturity of each new loan, and assigned invoices from the Internal Revenue Service (SII), which report the seller, the buyer, and the assignee of each invoice. Because small and large firms differ in their access to bank credit and their use of factoring, we expect their responses to differ, and we estimate the local projections separately by firm size.

Agustin Diaz Casanueva

Economist

I study how households make economic decisions about consumption, fertility, and labor supply in response to shocks and policy changes.