Editorial Board
Private Credit Should Be Welcomed — and Watched
Diverse sources of funding will benefit the financial system and economy as long as regulators monitor risks.
It’s good to have alternatives.
Photographer: Arthur Rothstein/Bettmann
Since the financial crisis of 2008, policymakers have been cracking down on leverage at banks. As a result, banks cut back on any lending that didn’t seem profitable enough if it wasn’t juiced by leverage.
The result was a big opportunity for fund managers: a private credit market now estimated to be worth some $1.6 trillion and forecast to double in the next five years. Bankers and bond investors have started to complain and to issue warnings about looming risks. Policymakers are asking questions.