Overcoming Challenges to Long-Term Financing: A Behavioral Perspective

A concern that has emerged repeatedly in the support for long-term sustainable development is the insufficient availability of long-term finance for projects such as infrastructure. This paper considers some of the possible strategies to overcome obstacles (cognitive or otherwise) to ensure the provision of long-term financing. The author discusses several behavioral interventions to surmount hurdles both from the demand and supply sides as well as creating enabling environments for better access to finance. This effectively requires challenging the rationale underlying private financial flows that are driven by short-term profits and rents, and strengthening mechanisms for mobilizing and allocating both domestic and external finance for value creation and development over a longer time horizon. It also involves properly designed projects that contractually distributes risks and shares returns within economically rational financing structures and create the right incentives for the various partners.