The Explosive Growth of Private Credit

Visiting fellow Marshall Lux and research assistant Olivia Zhao explore the rapid rise of private credit as the fastest-growing segment of asset management in their latest white paper. Once a niche market, private credit has expanded tenfold since the 2008 financial crisis, now projected to reach $3.5 trillion in assets by 2028. The report examines how nonbank lending has reshaped financing for middle-market companies, driven by regulatory shifts, bank retrenchment, and investor demand for yield. It analyzes private credit’s growing ties with banks, private equity, insurers, and retail investors, as well as its strong historical performance. However, the authors raise caution over the industry’s opacity, rising leverage, and potential systemic risks, particularly in a high-rate environment. As private credit embeds deeper into the global financial system, the paper calls for closer scrutiny to address regulatory blind spots and prepare for possible economic shocks.