Business Report :
Shortage of long-term financing is choking the investment-backed growth of companies in developing countries and hampering the ability of credit-worthy families to borrow for education and housing needs and escape poverty, said a new World Bank (WB) report released in Washington DC on Monday.
The report, Global Financial Development Report 2015-2016: Long-term Financing, said despite appeals by the Group of Twenty (G-20) and other key international groups, developing countries are struggling to mobilise the billions of dollars in financing they need to build badly-needed infrastructure in order to grow their national and regional economies.
The WB suggested that policy makers need to focus on institutional reforms, such as promoting macroeconomic stability, establishing a regulated and legally enforceable banking and investment system to secure the long-term financing, defined as investment funding that matures in a year or more.
While commercial banks remain the primary source, firms in developing countries saw a 15-fold increase in the amounts raised in equity, bond, and syndicated loan markets between 1991 and 2013, the report said.
It said long term housing finance is arguably the most important ingredient towards home ownership, yet the disparity across countries is stark: an average of 21 percent of individuals in high-income countries have an outstanding home loan, compared to a mere 2.4 percent in lower-middle and low-income countries. India is a typical case, with only 2.3 percent of individuals having a home loan.
