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Private-Credit Growth Fueled by Banks May Pose Risks
Investment bank loans to private-credit firms could pose a growing risk to the stability of the financial system, according to economists from the Federal Reserve Bank of Boston.
The private-credit industry’s rapid expansion has been accompanied by rising bank lending to the industry, including loans to firms and business development companies, or BDCs, that act as nonbank lenders. Banks often finance this lending by nonbanks.