Following the 2008 global financial crisis, many banks “de-risked” and, as a result, decreased lending to many small and mid-size companies. In response, the growth of lending by private credit funds began to accelerate and, in doing so, filled a significant gap in the U.S. credit market. This “private credit”, in turn, has helped facilitate the growth of the companies that serve as the backbone of the U.S. economy.
In this white paper, we discuss how the growth of private credit funds has benefitted the U.S. economy by providing a crucial, alternative source of lending to companies, and does so in a way that does not pose significant financial stability concerns. Among other things, the paper highlights that:
In light of these findings, this white paper concludes that private credit is distinguishable and poses no significant threat to financial stability, and provides an overall stabilizing effect on the U.S. economy.