Question: By some estimates, during the peak of the period of the financial crisis loans to corporations fell by almost 50%. Corporations borrow to meet short term liquidity needs such as working capital. This is especially the case if the business has seasonal peaks and valleys in sales. Corporations also borrow for long term capita I needs.
What are some examples of why companies need long term financing (how might they use the funds)?
What are the possible issues that can arise if banks are not making many long-term loans?