User Specialization and Asset Financing

London Business School Institute of Finance and Accounting Working Paper 196

Posted: 7 May 1998  

Michel A. Habib

University of Zurich; Ecole Polytechnique Fédérale de Lausanne - Ecole Polytechnique Fédérale de Lausanne

D. Bruce Johnsen

George Mason University - School of Law; PERC - Property and Environment Research Center

Abstract

This paper provides a common explanation for a variety of asset financing arrangements that are observed in practice, specifically leasing, secured debt, project finance without recourse, and vendor financing. Such arrangements are viewed as serving to allocate ownership of one or many assets to those users best able to make use of these assets, in a manner that precludes ex-post bargaining and therefore avoids the distortion of ex-ante investment. The paper also provides a partial explanation for the various levels of seniority of debt.

JEL Classification: G12

Suggested Citation

Habib, Michel A. and Johnsen, D. Bruce, User Specialization and Asset Financing. London Business School Institute of Finance and Accounting Working Paper 196. Available at SSRN: https://ssrn.com/abstract=6329

Michel A. Habib (Contact Author)

University of Zurich ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland
41-44-634-2507 (Phone)
41-44-634-4903 (Fax)

HOME PAGE: http://www.isb.uzh.ch/institut/profs/mhabib.htm

Ecole Polytechnique Fédérale de Lausanne - Ecole Polytechnique Fédérale de Lausanne ( email )

c/o University of Geneve
40, Bd du Pont-d'Arve
1211 Geneva, CH-6900
Switzerland

D. Bruce Johnsen

George Mason University - School of Law ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8066 (Phone)
703-993-8088 (Fax)

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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