Business
Markets & Investment · Issue No. 10
Financing
The evolving landscape of corporate finance, capital markets and the institutions that allocate capital in a changing economy.
Special.Report Editors
March 2023
EXECUTIVE SUMMARY
The structure of corporate finance is changing in ways that have significant implications for how companies grow, how investors allocate capital and how regulators think about market stability. This report examines the shift from public to private markets, the rise of private credit, the changing role of banks in corporate finance, and the policy questions these developments raise.
THE REPORT
The American capital markets have undergone a structural transformation over the past two decades. The number of publicly traded companies has declined by nearly half since its peak in the late 1990s, while private equity assets under management have grown to more than $10 trillion. The implications of this shift — for corporate governance, market transparency and the distribution of investment returns — are only beginning to be understood.
Private credit has emerged as one of the most significant developments in corporate finance, with direct lending funds displacing banks as the primary source of leveraged finance for middle-market companies. This shift has occurred largely outside the regulatory perimeter designed to ensure financial stability.
The changing landscape raises fundamental questions about market structure. When the most consequential financing decisions are made in private markets, with limited disclosure and regulatory oversight, what are the implications for market efficiency, systemic risk and the public interest in transparent capital allocation?
This report examines the structural shift from public to private markets, the growth of private credit, the regulatory gaps it creates, and the policy questions that legislators, regulators and market participants will need to address as private markets continue to grow in scale and consequence.
