Private Credit, Balance Sheets and Financial Stability

Gregor Matvos, Tomasz Piskorski and Amit Seru

No 34991, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We document new evidence on the capitalization, funding structure, and performance of private credit funds using comprehensive fund- and asset-level data covering most of the industry. Private credit funds are highly capitalized, with equity typically accounting for 65–80% of total assets—more than six times the capitalization of U.S. banks, where equity represents about 10%. Debt usage is moderate and largely reflects bank credit lines used for liquidity management. Fund lives average 10–12 years, while underlying loan maturities are generally shorter, implying little or no maturity mismatch—unlike banks, which fund long-term assets with short-term callable deposits. Private credit portfolios are diversified across industries, geographies, and credit strategies, reducing exposure to correlated shocks. Performance data show positive average net annualized returns with limited downside risk to creditors, as losses are largely borne by equity investors. Overall, private credit funds appear conservatively structured and unlikely to pose systemic risks comparable to traditional banks under their current balance-sheet configurations. We conclude by discussing potential vulnerabilities that could emerge as the sector grows, including governance and disclosure frictions, stress-period dynamics, bank–nonbank linkages, and the transmission of losses through limited partner balance sheets and retail investment vehicles.

JEL-codes: G23 G28 L15 L5 (search for similar items in EconPapers)
Date: 2026-03
New Economics Papers: this item is included in nep-acc
Note: CF ME
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w34991.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:34991

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34991
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().