What role does long-term finance play in economic development? Extending the maturity structure of finance is often considered to be at the core of sustainable financial development. Long-term finance— frequently defined as all funding for a time frame exceeding one year—may contribute to faster growth, greater welfare, shared prosperity, and enduring stability in two important ways: by reducing rollover risks for borrowers, thereby lengthening the horizon of investments and improving performance, and by increasing the availability of longterm financial instruments, thereby allowing households and firms to address their lifecycle challenges.
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