Regulation, Rates, and Private Credit: An Analysis of the Post-GFC U.S. Private Credit Market

This thesis examines the rise of private credit and its implications for U.S. lending markets, with a particular focus on the interaction between post-Global Financial Crisis (GFC) regulatory reforms and monetary policy. Utilizing hand collected firm-level data from publicly traded Business Development Companies (BDCs), alongside aggregate measures of private credit investment activity, this thesis’ empirical analysis provides an assessment on the impact of post-GFC regulatory reforms and macroeconomic policy on private credit investment activity. The findings of this thesis document a consistent positive relationship between interest rates and private credit deployment at both the firm and aggregate level, challenging the conventional notion that higher interest rates constrain borrowing. This relationship is consistent with a reallocation of credit supply, where regulatory constraints on traditional banks reduce their lending capacity, allowing private credit providers to expand their investment activity as substitute lenders. A complementary analysis of BDC price-to-book ratios, suggests improving market perceptions of loan quality over time, alongside recent emerging signs of valuation pressure and concerns over credit quality. Overall, the results highlight the growing role private credit has within the U.S. economy, and its implications for capital allocation, financial stability, and broader economic performance.