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Direct lenders in the U.S. middle market

Author

Listed:
  • Davydiuk, Tetiana
  • Marchuk, Tatyana
  • Rosen, Samuel

Abstract

This paper studies the rise of direct lending using a comprehensive dataset of investments by business development companies (BDC). We exploit three exogenous shocks to credit supply, including new banking regulations and a major finance company collapse, to establish that BDC capital acts as a substitute for traditional financing. Using firm-level data, we further document that firms’ access to BDC funding stimulates their employment growth and patenting activity. Beyond credit provision, BDCs contribute to firm growth through managerial assistance.

Suggested Citation

  • Davydiuk, Tetiana & Marchuk, Tatyana & Rosen, Samuel, 2024. "Direct lenders in the U.S. middle market," Journal of Financial Economics, Elsevier, vol. 162(C).
    • Handle: RePEc:eee:jfinec:v:162:y:2024:i:c:s0304405x24001697
    DOI: 10.1016/j.jfineco.2024.103946
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    References listed on IDEAS

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