Private Credit: Risks and Benefits of a Maturity Wall

Mar 22, 2025

Rui Albuqerque , Adam Zawadowski

Working Paper No. 00149-00

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A maturity wall occurs in private credit funds when the fund reaches its maturity date, where it can no longer roll over its loans. Unlike banks, which are not bound by a maturity wall, private credit funds can better incentivize borrowers, albeit at the cost of inefficient liquidation. Using a model, we show that private credit not only expands access to credit but also takes business away from banks. By stealing business, it removes riskier loans from banks' balance sheets. At the aggregate level, expected payoff increases but tail events become more severe due to the potential for excessive liquidation by private creditors.


Rui Albuqerque

Rui Albuqerque

Adam Zawadowski

Adam Zawadowski

Central European University