Moody's Talks - Inside Economics Private Credit & Systemic Risk
Jun 18, 2025
Join Samim Ghamami, a Senior Economist at the U.S. Securities and Exchange Commission, as he dives into the booming private credit market, now worth over $2 trillion. He discusses the systemic risks tied to this rapidly expanding sector and how it impacts middle-market lending, private equity, and emerging markets like real estate. Samim also addresses the challenges of transparency and the regulatory landscape in the wake of the COVID pandemic, emphasizing the need for updated policies to stabilize financial systems.
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Definition and Growth of Private Credit
- Private credit refers to direct lending to small and medium-sized businesses outside banks and public bond markets.
- This market has grown to around $1.5 to $2 trillion in the U.S., filling gaps left by traditional banks after the GFC.
Private Credit Fills Bank Gaps
- Private credit lenders provide financing tailored to riskier, smaller firms avoided by banks.
- This fills an important credit gap due to banks' stricter post-GFC capital rules.
Private Credit Reduces Run Risk
- Unlike banks, private credit benefits from better maturity matching through long-horizon institutional investors.
- This reduces maturity mismatch risk and systemic run risk present in traditional banking.