The explosive growth of private credit over the past 15 years has attracted the attention of an increasing number of policy makers and academic researchers. This article provides an overview of the large-sample research to date, structured around three core themes: the distinct economic function of private credit, the macroeconomic implications of the expansion of private debt, and the evaluation of private debt as an asset class. It highlights areas where there is convincing evidence, such as the overall exposure of the banking sector to private credit, and outlines several other areas where the evidence remains limited, such as the interplay between monetary policy and private credit and the evolution of underwriting standards. Finally, the article situates the evolution of high-yield debt markets, including private credit, within a historical context, highlighting their fundamental connection to the evolution of the private equity industry.
Victoria Ivashina (Thu,) studied this question.