The Theoretical Foundations and Problematic Areas of the Contemporary Long-Term Financing Theory
Year: 2025
Type: article
Abstract: The imperative of achieving a growth rate for the Russian economy that meets or exceeds the global average-grounded in the pressing issue of resource availability, particularly financial resources-stimulates significant academic interest in a thorough examination of this challenge. Given that financial resources are essential for addressing structural issues, including the establishment of advanced technological production and investments in infrastructure and human capital, these resources must be of a long-term nature; hence, the term “long-term finance” is frequently used in the literature. The purpose of this study is to elucidate the concept of long-term finance, identify the key areas of inquiry associated with it, and delineate the theoretical frameworks necessary for examining its various dimensions. The primary methods employed in this study include a content analysis of pertinent academic literature and a critical examination of case studies pertaining to the formation and utilization of long-term financial resources across various countries. Results : This study has led to the development of analytical approaches to long-term finance, emphasizing their supply, demand, and the mechanisms that facilitate the alignment of these two dimensions. Specifically, the analysis of the supply of long-term finance includes a critical examination of the concept of global savings glut. The measures that resulted in the freezing of Russian reserve assets undermine one of the primary drivers behind the migration of capital flows towards “safe haven” destinations, potentially affecting the incentives for various entities to accumulate substantial savings. In the analysis of the demand for long-term finance, it is demonstrated that the maturity structure of debt held by firms and governments is determined through a trade-off between the costs and the rollover risks. In the examination of the interaction between the demand on and supply of long-term finance, the critical importance of maintaining the functionality of mechanisms that facilitate the transformation of maturities is underscored. The study identifies five vehicles essential for the effective functioning of long-term finance. Furthermore, it demonstrates that regulatory errors can compromise these vehicles, hindering their capacity to supply the economy with necessary longterm financial resources.
Source: Finance: Theory and Practice
Author: K. V. Krinichansky
Institution: Financial University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4415567965