India, May 29 -- Despite a seemingly endless supply of and demand for private credit, the rapid expansion of the market has been a cause of concern for some regulators and executives. Should investors be worried? This brief explores certain aspects of private credit that warrant a close look-including the retailisation of the market and the current interest rate environment. It highlights the implications for financial stability, including the potential for finance to be rendered a disservice to the real economy.

The financial cycle is never eradicated, nor is financial instability ever really extinguished. On the contrary, financial risk moves like liquid mercury out of certain entities and into others. And increasingly credit-fuelled e...