| Author Name | MIYAKAWA Daisuke (Waseda University) / YANAOKA Masaki (TOKYO SHOKO RESEARCH) / YAZAWA Hirotaka (Sumitomo Mitsui Finance and Leasing) / YUKIMOTO Shinji (Sumitomo Mitsui Finance and Leasing) |
|---|---|
| Creation Date/NO. | October 2023 23-J-040 |
| Research Project | Study group on corporate finance and firm dynamics |
| Download / Links |
Abstract
Firms can make use of tangible capital assets such as production equipment through capital investments and leasing. In this study, we examine the technical characteristics of the leasing industry by comparing the sensitivities of those two channels to capital investment opportunities. First, we find that investment in leasing is more sensitive to changes in investment opportunities in industries with relatively underdeveloped second-hand markets for tangible capital assets. Second, in industries with relatively underdeveloped second-hand markets, leasing activity is more sensitive to investment opportunity in firms facing tighter financial constraints. These results suggest that the ability to sell tangible capital assets on the second-hand market provides financially constrained firms with access to tangible assets. Such ability is an important technical feature of the leasing industry.
