Long-term finance can be defined as any financial instrument with a maturity exceeding one year (such as bank loans, bonds, leasing, and other forms of debt finance), and public and private equity instruments. The fundamental principle of long-term finances is to finance strategic capital projects e.g. A 10-year mortgage or a 20-year lease.
Long-term finance contributes to faster growth because it rolls over risks for borrowers by lengthening the horizon of investments. This gives borrowers’ households and firms some flexibility to address and adjust to life-cycle and economic challenges
