Borrowing Short to Lend Long: Fraudulent or Not? Elements Missing From the Current Debate
Sutton D. Ismail A.M. Almustafa H.H.T.
2025John Wiley and Sons Inc
Business Ethics, the Environment and Responsibility
2025
There has been a long-running debate conducted between two pairs of Austrian School economists concerning the legitimacy of borrowing short to lend long (BSLL). Barnett and Block take the view that the practice amounts to fraud. Their fellow “Austrians,” Bagus and Howden argue that, while risky, the practice is not fraud. Barnett and Block state that BSLL can lead to the Austrian Business Cycle (ABC), in which mal-investment transforms booms into bubbles, ending in crashes. This inquiry seeks to contribute to the debate, addressing currently neglected issues. These issues involve reconfiguring the debate for consistency between the protagonists central truth claims, elevating risk-taking behavior as the crucial determinative factor of market failures, including certain macro-prudential implications, and concluding that BSLL is not inherently fraudulent. The debate is essentially an ethical one, in which a basic understanding of fraud must be agreed.
Austrian economics , economic system stability , fraud , lending maturity arbitrage , macroprudential implications
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Finance and Accounting, KIMEP University, Almaty, Kazakhstan
Economics, Bryant University, Zhuhai, China
Finance and Accounting
Economics
10 лет помогаем публиковать статьи Международный издатель
Книга Публикация научной статьи Волощук 2026 Book Publication of a scientific article 2026