Plausibly Exogenous [1696] - Direct Lending (09/24/2024)

LHS Variable
Demand for Business Development Company (BDC) Funding

RHS Variable
Cost of Traditional Bank Capital

Source of Exogenous Variation
Three contractionary shocks to the credit supply by traditional financial institutions: the introduction of stress tests for bank holding companies; the collapse of a major finance company, the CIT Group; and the introduction of new accounting standards on the consolidation of off-balance items for bank

- Davydiuk, Marchuk, and Rosen (2024), “Direct lenders in the U.S. middle market”