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Understanding the Use of Long-term Finance in Developing Economies

Author

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  • Mr. Maria Soledad Martinez Peria
  • Mr. Sergio L. Schmukler

Abstract

This short paper reviews recent literature on the use of long-term finance in developing economies (relative to advanced ones) to identify where long-term financing occurs, and what role different financial intermediaries and markets play in extending this type of financing. Although banks are the most important providers of credit, they do not seem to offer long-term financing. Capital markets have grown since the 1990s and can provide financing at fairly long terms. But few firms use these markets. Only some institutional investors provide funding at long-term maturities. Governments might help to expand long-term financing, although with limited policy tools.

Suggested Citation

  • Mr. Maria Soledad Martinez Peria & Mr. Sergio L. Schmukler, 2017. "Understanding the Use of Long-term Finance in Developing Economies," IMF Working Papers 2017/096, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/096
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=44855
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    Cited by:

    1. Léon, Florian, 2019. "Long-term finance and entrepreneurship," Economic Systems, Elsevier, vol. 43(2), pages 1-1.
    2. Sommer, Christoph, 2021. "The impact of patient capital on job quality, investments and firm performance: Cross-country evidence on long-term finance," IDOS Discussion Papers 6/2021, German Institute of Development and Sustainability (IDOS).
    3. Abraham, Facundo & Cortina, Juan J. & Schmukler, Sergio L., 2021. "The rise of domestic capital markets for corporate financing: Lessons from East Asia," Journal of Banking & Finance, Elsevier, vol. 122(C).

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