Skip to content

FRM Part II · FRM Exam Part II · The Global Drivers of Private Credit

A risk analyst at a pension fund reviews why private credit assets under management have expanded rapidly in the years following the global financial crisis. Which macro-financial driver is most consistent with the global drivers literature on private credit growth?

Tighter post-crisis bank regulation and capital requirements moved part of leveraged lending from banks to non-bank private credit lenders, while low rates and the search for yield drew investor capital. The other options describe developments that did not happen or would reduce private credit growth.

  1. ATighter bank capital and regulatory requirements that pushed some leveraged lending out of banks toward non-bank lendersCorrect
  2. BA sustained fall in the demand for leveraged loans from sponsor-backed firms
  3. CA ban on institutional investors holding illiquid assets
  4. DA rise in bank deposit insurance limits that made banks more willing to lend to risky borrowers

Explanation

Post-crisis regulation raised the cost to banks of holding riskier loans, so non-bank lenders filled the gap. Persistently low rates also pushed investors toward yield. The other options describe changes that did not occur or would work against private credit growth.

Did you get it right without looking?

One question tells you little. A timed set on The Global Drivers of Private Credit shows your real accuracy, how long you take and where you lose marks.

Practise The Global Drivers of Private CreditFree diagnostic mock

More The Global Drivers of Private Credit questions