The third Global Financial Development Report contributes to the ongoing debate on the role of long-term finance in sustaining economic development and ensuring shared prosperity. This report provides a nuanced, practical, and evidence-based approach to financial sector policy. It offers new research and data that help fill gaps in the knowledge on long-term finance.
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Use of long-term finance—frequently defined as all financing for a time frame exceeding one year—is more limited in developing countries, particularly among smaller firms and poorer individuals.
Where it exists, the bulk of long-term finance is provided by banks; use of equity, including private equity, is limited for firms of all sizes.
The global financial crisis of 2008 has also led to a reduction in leverage and use of long-term debt for developing country firms.
Market failures and policy distortions have a disproportionate effect on long-term finance, suggesting an important role for policies that address these failures and distortions.
Sustainably extending the maturity structure of finance is a key policy challenge since long-term finance can be an important contributor to economic growth and shared prosperity.
45 percent [50 percent] of policy makers responding to the barometer consider institutional reforms [macroeconomic stability] as the most important to promote long-term finance
In high income countries, annual syndicated loan issuances are on average 6.2 percent of GDP, and only 1.8 percent of GDP in lower middle and low income countries.
Institutional investors’ assets are on average 99 percent of GDP in high income countries but only 11 percent of GDP in lower middle and low income countries.
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