Abstract
The financial leasing market in previous years is characterised by a growth that is also expected in the coming period. Besides, developing countries are striving to attract as much foreign direct investment (FDI) as possible to accelerate economic growth and achieve macroeconomic stability. The aim of this paper is to determine whether there is a relationship between FDI and the level of market concentration in the financial leasing sector of the Republic of Serbia and to determine whether this relationship is long-term or short-term. Quarterly data from the first quarter of 2006 to the first quarter of 2019 were used. Autoregressive Distributed Lag approach (ARDL) and bounds test were used for data analysis. The results showed that there is a negative relationship between FDI and the level of market concentration in the financial leasing sector of the Republic of Serbia in the long run, while there is no statistically significant relationship between FDI and the level of market concentration in the short run.
Highlights
Financial leasing is a type of leasing that essentially transfers the risks and benefits of owning an asset, from the lessor to the lessee
The author will strive to prove that foreign direct investment (FDI) inflows affect the level of market concentration in the financial leasing sector of the Republic of Serbia
General research hypothesis: H0: FDI inflows affect the level of market concentration in the financial leasing sector of the Republic of Serbia
Summary
Financial leasing is a type of leasing that essentially transfers the risks and benefits of owning an asset, from the lessor to the lessee. The lessee is not the formal owner of the asset and the risks related to potential losses due to unused capacity, technological obsolescence, etc. As a specific form of financing, leasing is of great importance for the development of the entire economy, especially for the segment of small and medium enterprises, newly established enterprises and for agricultural holdings (Drljača, 2015). Because of the importance of financial leasing, the sector must be well developed and have a large number of competitors on the market, both national and foreign. Blomstrom (1986) argues that FDI in small economies increases market concentration due to the size and degree of technological sophistication of foreign compared to national companies Foreign companies influence the progress of the host country by changing the market structure. Blomstrom (1986) argues that FDI in small economies increases market concentration due to the size and degree of technological sophistication of foreign compared to national companies
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