TY - JOUR T1 - Practical Applications of Direct Lending: Evidence from European and US Markets JF - The Journal of Alternative Investments DO - 10.3905/jai.2022.jaipa055 SP - jai.2022.jaipa055 AU - Laura Fritsch AU - Wayne Lim AU - Alexander Montag AU - Martin C. Schmalz Y1 - 2022/02/22 UR - https://pm-research.com/content/early/2022/02/22/jai.2022.jaipa055.abstract N2 - In Direct Lending: Evidence from European and US Markets, from the Winter 2022 Due Diligence Special Issue of The Journal of Alternative Investments, Laura Fritsch, Wayne Lim, Alexander Montag, and Martin Schmalz, all of Oxford University, contribute to the nascent literature on direct lending by using various sources of data absent from other studies. The direct lending market has grown considerably in recent decades, and the authors provide empirical support for the likely reasons. These growth drivers provide insights into the supply of, and demand for, direct lending capital and its future market growth.The authors found that the volume of private debt deals has grown as borrowers pursued opportunities in the direct lending market. Investors supplied capital to the market, whose yields were higher than those of corporate bonds with similar risk. The authors found that changes in banking since the financial crisis contributed to the growth of direct lending as an alternative source of funds. Private loans provided a substitute for the declining number of bank loans. However, in a sample of loans from a major direct lender, the authors found that nearly half of the loans had banks as co-investors, suggesting that direct lending also plays a complementary role to bank lending. ER -