Issue Brief: Long-Term Financing Investor Perspectives in Europe

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5 pages
Source: CFA Institute
Bob Dannhauser, CFA



In the aftermath of the global financial crisis, a more diversified set of intermediaries between providers and users of capital is deemed desirable, with public budgets under severe pressure and the commercial banking system struggling to recover. Investors, at both the individual and institutional level, may play an increasingly important role in directing capital to long term investment projects. In recognition of the need for alternatives to public capital to fund development and reinvigorate European economies, the European Commission in March 2013 issued a Green Paper on Long-Term Financing of the European Economy to investigate how to create productive and efficient channels for directing capital from savers to users involved in the creation and maintenance of tangible (such as infrastructure, housing, climate change technology) and intangible (such as research and development and education) assets. Such long-lived capital projects are often characterized by cash-flow patterns that take time to generate returns on initial investments, and are also often fairly illiquid by nature.

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