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| Format: | Preprint |
| Published: |
2026
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| Online Access: | https://arxiv.org/abs/2603.14491 |
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| _version_ | 1866908887774396416 |
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| author | Zou, Jiacheng |
| author_facet | Zou, Jiacheng |
| contents | Private credit assets under management grew from \$158 billion in 2010 to nearly \$2 trillion globally by mid-2024, fundamentally reshaping corporate credit markets. This paper provides a systematic survey of the academic literature on private credit, organizing theory and evidence around four questions: why the market has grown so rapidly, how direct lender technology differs from bank lending, what risk-adjusted returns investors earn, and whether the sector poses systemic risks. We develop an integrated theoretical framework linking delegated monitoring, soft-information processing, and incomplete contracting to the institutional specifics of modern direct lending. The empirical evidence documents a distinctive lending technology serving opaque, private-equity-sponsored borrowers at a meaningful and persistent spread premium over the broadly syndicated loan market, while performance evidence suggests that risk-adjusted returns for the average fund are largely consumed by fees. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2603_14491 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | Private Credit Markets Theory, Evidence, and Emerging Frontiers Zou, Jiacheng General Finance Private credit assets under management grew from \$158 billion in 2010 to nearly \$2 trillion globally by mid-2024, fundamentally reshaping corporate credit markets. This paper provides a systematic survey of the academic literature on private credit, organizing theory and evidence around four questions: why the market has grown so rapidly, how direct lender technology differs from bank lending, what risk-adjusted returns investors earn, and whether the sector poses systemic risks. We develop an integrated theoretical framework linking delegated monitoring, soft-information processing, and incomplete contracting to the institutional specifics of modern direct lending. The empirical evidence documents a distinctive lending technology serving opaque, private-equity-sponsored borrowers at a meaningful and persistent spread premium over the broadly syndicated loan market, while performance evidence suggests that risk-adjusted returns for the average fund are largely consumed by fees. |
| title | Private Credit Markets Theory, Evidence, and Emerging Frontiers |
| topic | General Finance |
| url | https://arxiv.org/abs/2603.14491 |