Direct Lending: Evidence from European and U.S. Markets

Journal of Alternative Investments, Forthcoming

Posted: 16 Sep 2021 Last revised: 26 Apr 2022

See all articles by Laura Fritsch

Laura Fritsch

University of Oxford - Said Business School

Wayne Lim

Harvard University; University of Oxford

Alexander Montag

Indiana University; Research Institute of Industrial Economics (IFN)

Martin C. Schmalz

CEPR; University of Oxford - Finance; CESifo; European Corporate Governance Institute (ECGI)


Led by the growth of direct lending, private debt assets under management almost tripled over the past decade. What do we know about it and why has it grown? Using a proprietary dataset, we present new empirical facts about direct lending funds and investigate the demand and supply drivers that have likely contributed to its growth. We identify the following contributing factors to the growth of direct lending: capital supply due to a shrinking banking sector due to mergers and acquisitions and regulation; financial innovation; changing borrower needs; changing borrower types; and a low-interest-rate environment.

Keywords: Private Debt; Direct Lending, Banking Regulation, Non-bank Lending, Private Markets, Private Equity, Lending, Alternative Assets

JEL Classification: G2, G23, G21, G18, G11, G10

Suggested Citation

Fritsch, Laura and Lim, Wayne and Montag, Alexander and Schmalz, Martin C. and Schmalz, Martin C., Direct Lending: Evidence from European and U.S. Markets. Journal of Alternative Investments, Forthcoming, Available at SSRN:

Laura Fritsch

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Wayne Lim (Contact Author)

Harvard University ( email )

University of Oxford ( email )

Alexander Montag

Indiana University ( email )

Bloomington, IN 47405
United States

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15

Martin C. Schmalz

CEPR ( email )

United Kingdom

University of Oxford - Finance ( email )

United States

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

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