Victoria Ivashina
This paper provides an introduction to the modern private debt market and examines its rapid expansion following the 2007–2009 global financial crisis. Traditionally, economists distinguished between public debt markets and private debt in the form of bank lending. In contemporary markets, however, “private debt” refers to credit originated and held by nonbank financial intermediaries, including private credit funds and business development companies. The paper reviews the key drivers of the sector’s growth; analyzes the distinctive features of private lending arrangements and funding structures; and discusses the implications for traditional banking, financial intermediation, and financial stability. While the sector’s rapid growth and increasing complexity warrant careful monitoring, the paper argues that private debt represents an important and likely durable component of modern financial markets.
Πηγή:Journal of Economic Perspectives