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This paper provides evidence of the presence and relevance of a credit-chain amplification mechanism by looking at its implications for the correlation of industries. In particular, it tests the hypothesis that an increase in the use of trade-credit along the input-output chain linking two industries results in an increase in their correlation. The analysis uses detailed data on the correlations and input-output relations of 378 manufacturing industry-pairs across 44 countries with different degrees of use of trade credit. The results provide strong support for this hypothesis and indicate that the mechanism is quantitatively relevant.

Access to Finance --- Adverse effect --- Bankruptcy --- Bankruptcy and Resolution of Financial Distress --- Business cycles --- Central Bank --- Debt --- Debt Markets --- Economic Theory and Research --- Finance and Financial Sector Development --- Interest rate --- Investment and Investment Climate --- Liquidity --- Macroeconomics --- Macroeconomics and Economic Growth --- Risk neutral --- Value added