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The increasingly short supply of long-term capital since the 2008 financial crisis has profound implications for growth and financial stability. The OECD has launched a project to develop research and identify and promote policy options to encourage institutional investors to act in their long -term capacity.
Project outline (pdf)
Project outline detailed description (pdf)
Project background - Promoting longer-term investment by institutional investors (pdf)
Why is long-term investment important?
- Patient capital allows investors to access illiquidity premia, lowers turnover, encourages less pro-cyclical investment strategies and therefore higher net investment rate of returns and greater financial stability.
- Engaged capital encourages active voting policies, leading to better corporate governance.
- Productive capital provides support for infrastructure development, green growth initiatives, SME finance etc., leading to sustainable growth.
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Long-term investors: Getting the model right
Carolyn Ervin, Director of the OECD Directorate for Financial and Enterprise Affairs, describes why policymakers must take action to encourage long-term investment in this OECD Observer article.
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