Why Do Banks Provide Leasing?

Posted: 26 Mar 2014 Last revised: 17 Jun 2015

See all articles by Felix Noth

Felix Noth

Otto-von-Guericke-Universität Magdeburg; Halle Institute for Economic Research

Dilek Bulbul

Goethe University Frankfurt - House of Finance

Marcel Tyrell

Zeppelin University

Date Written: October 10, 2013

Abstract

Banks are engaging in leasing activities at an increasing rate, which is demonstrated by aggregated data for both European and U.S. banking companies. However, little is known about leasing activities at the bank level. The contribution of this paper is the introduction of the nexus of leasing in banking. Beginning from an institutional basis, this paper describes the key features of banks’ leasing activities using the example of German regional banks. The banks in this sample can choose from different types of leasing contracts, providing the banks with a degree of leeway in conducting business with their clients. We find a robust and significant positive impact of banks’ leasing activities on their profitability. Specifically, the beneficial effect of leasing stems from commission business in which the bank acts as a middleman and is not affected by the potential defaults of customers.

Keywords: Leasing, Bank performance

JEL Classification: G21, G32, L11

Suggested Citation

Noth, Felix and Bulbul, Dilek and Tyrell, Marcel, Why Do Banks Provide Leasing? (October 10, 2013). Journal of Financial Services Research, October 2014, Vol. 46, 137-175, Available at SSRN: https://ssrn.com/abstract=2414384

Felix Noth (Contact Author)

Otto-von-Guericke-Universität Magdeburg ( email )

Universitätspl. 2
PSF 4120
Magdeburg, D-39106
Germany

Halle Institute for Economic Research

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
Halle, 06108
Germany

HOME PAGE: http://www.iwh-halle.de/asp/person.asp?fnh&Lang=e&Abteilung=fin

Dilek Bulbul

Goethe University Frankfurt - House of Finance ( email )

Grüneburgplatz 1
Frankfurt am Main, DE 60323
Germany

Marcel Tyrell

Zeppelin University ( email )

Am Seemooser Horn 20
Friedrichshafen, Lake Constance 88045
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
619
PlumX Metrics