Financing the digital economy: the role of private credit

Puriya Abbassi, Iñaki Aldasoro and Sebastian Doerr

BIS Quarterly Review, 2026

Abstract: Surging loan demand from software and technology (tech) firms materially contributed to the post-2020 growth of direct lending, the main type of private credit. The Covid19 pandemic accelerated the shift to the digital economy, increasing tech firms’ funding needs. Private credit, with its model centred on lending against cash flows and intangible assets, was well placed to meet this demand. Tech firms’ share of direct lending doubled to over 40% between 2020 and 2025. Growth was concentrated in US cities with a strong pre-pandemic tech presence, precisely where the shift to the digital economy raised credit demand the most. Tech firm entry and employment subsequently grew more in areas with ample private credit, highlighting how a financial sector adept at financing asset-light borrowers can support innovative firms and growth. Whether the fast growth of the tech sector and private credit are sustainable or ultimately bear risks for financial stability remains an open question.

JEL-codes: G21 G23 G32 O33 (search for similar items in EconPapers)
Date: 2026
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