Leasing Industry Research Articles

Understanding the Impacts on Automobile Leasing Firm Loss in China: An Analysis of Vehicle Residual Value Risk and Lease Price Patterns

ABSTRACTThe paper addresses vehicle depreciation and pricing issues in the automobile leasing industry in China. Under the current industry climate, operating lease firms face large residual value risk, and therefore, how to price contracts that minimises such risk is an important question. By analysing market data of used vehicles, an exponential decay function was developed to model the price dynamics across different brands and model series. Specifically, we estimate the depreciation rate directly from the data. In addition, by considering all revenue and cost components and converting them into present value terms, appropriate deposit and rents combintions were sought under different profit expectations. Length of contracts, age of vehicles and purchase cost factors were also considered to detect any further patterns in rents. The research outcomes will provide guidance on lease pricing given the current development of the industry, thereby improving firms’ profitability position as well as helping maintain their competitiveness and growth.

Assessment of aircraft leasing efficiency: An airline perspective

This research contributes to the theory of assessing aircraft leasing efficiency from an airline's perspective by revising factors influencing leasing decisions and developing an integrated approach to modelling aircraft leasing decisions. Despite the extensive research on aircraft leasing appraisal, modelling tools for informed decision-making require constant updates regarding the attributes to be included and approaches to uncertainty conditions. The key contribution of this research supports the ongoing discussion of the practical deployment of management science in the aircraft leasing field, aiding the industry in quickly adapting to changing market conditions. The research includes brief analyses of key performance indicators in the aircraft leasing industry to identify trends and a literature review to justify the current factors influencing leasing decisions. It is demonstrated that integrating operational modelling into aircraft leasing assessment can provide a data-driven justification for the importance of new, fuel-efficient aircraft in achieving sustainability goals and maintaining operational profitability. The sensitivity analysis further illustrates the robustness of the model and solution, and its capacity to generate scenario assessments reflecting varying conditions such as changes in demand, taxes, fuel costs, and other airline expenses. The simulation of a hypothetical example based on data from airlines’ business intelligence platforms reveals that significant initial fixed leasing payments, including taxes, can negatively impact an airline's ability to modernise its fleet through leasing. Fuel efficiency, zero customs duties and VAT on aircraft leasing, and sufficient capital to cover fixed leasing costs are the main drivers stimulating fleet modernisation and can be justified by a slight increase in expected profits.

Luxury Car Leasing

This study aims to provide insights and knowledge to new entrepreneurs on developing their businesses by utilizing luxury car leasing services, focusing on the benefits of leasing versus buying, personalizing the lease experience, and supporting business activities through upgraded personal branding. The objectives are to analyze the advantages of luxury car leasing over purchasing, explore the personalized leasing experience for customers, and examine the role of luxury car leasing in enhancing business operations and personal branding. This research employs a qualitative approach, utilizing case studies and interviews with both leasing companies and lessees. Data was collected through structured interviews with key stakeholders in the luxury car leasing industry, including leasing company representatives and customers who have leased luxury cars. Additionally, market analysis and literature reviews were conducted to support the findings. The findings indicate that luxury car leasing offers significant advantages over purchasing, including financial flexibility, access to the latest car models, and lower maintenance costs. Personalized leasing experiences were highly valued by customers, contributing to higher satisfaction and loyalty. Furthermore, leasing luxury cars positively impact personal branding and business operations by providing entrepreneurs with a sophisticated image and reliable transportation for business activities.

Economic Vitality, Sustainability and Marketability of Mixed-Use Development Projects in the Leasing Industry

The study attempted to determine the economic vitality, sustainability, and marketability of mixed-use development projects in the leasing industry in the Philippines. The goal of this study is to identify the correlation among economic vitality, sustainability, and marketability. Additionally, develop a plan to enhance the economic vitality, sustainability, and marketability for stakeholders to use for future business ventures. The study employed the descriptive-correlational method of research with the help of a survey questionnaire. The population of the study came from 80 mixed-use development projects within the leasing industry in the second district of Laguna, Philippines. A sample of 67 was computed using the Slovin formula at 5% margin of error and 95% confidence interval. The actual selection of the respondents was done using a purposive random sampling technique. After thorough analysis, the following conclusions were made. The diversity of businesses and tenant types adds value to the overall development. The confidence in long-term development projects focuses on sustainability and future adaptation. Tenant satisfaction is crucial for marketability, suggesting a focus on both attracting and retaining tenants. The economic vitality has a direct relationship with the sustainability of mixed-use development projects in the leasing industry. Economic significantly affects the marketability of mixed-use development projects in the leasing industry. As the level of sustainability increases, the level of marketability of mixed-use development projects in the leasing industry also increases. Hence, an action plan that would improve the economic vitality, sustainability, and marketability of mixed-use development projects in the leasing industry was proposed.

Ocena zależności między rozwojem branży leasingowej a wzrostem gospodarczym w Polsce

According to the data published in 2022 by the Polish Agency of Enterprise Development (Polska Agencja Rozwoju Przedsiębiorczości – PARP), small and medium-sized enterprises (SMEs) generate 49.6% of the Polish GDP. At the same time, the SME sector is the largest recipient of services offered by the leasing industry. The aim of the research described in the article was to determine whether a long-run relationship exists between the development of the leasing industry and the economic growth in Poland. The analysis was based on GDP per capita time series and the actual net value of leasing contracts per capita as measures of economic growth and the activity of the leasing industry, respectively. The research used quarterly data for the years 2010 –2021, obtained from Statistics Poland publications and the dataset available on the Polish Leasing Association (Związek Polskiego Leasingu – ZPL) website. The results of cointegration analysis and the error correction mechanism confirmed the existence of a long-run relationship between the activity of the leasing industry and the economic growth in Poland.

Project Risk Analysis and Early Warning of Culture and Tourism Group Financial Leasing Company

Under the background of strict regulation, due to the cyclical adjustment of the financial leasing industry, some top companies have maintained a growth trend in asset size and net profit. Internal differentiation has emerged in the financial leasing industry, increasing operational pressure, and a slowing trend in asset size growth. Although the overall pressure on credit quality has eased, downward pressure on asset quality is widespread, and the recovery period for narrowing profit space is still long. With the continuous upgrading and iteration of digitization, intelligence, and specialization, Culture and Tourism Group Financial Leasing Company should strengthen its professional ethics, improve its risk analysis and prediction capabilities, design integrated business guidelines for due diligence information collection and risk analysis, rely on big data to build a leasing asset identification, evaluation, monitoring, and early warning system, and establish a comprehensive, multi angle, and lean risk analysis and early warning mechanism. Through case analysis, problems are identified in a timely manner, and continuous reflection and improvement are made. Business process diagrams are drawn according to different scenarios, crisis warning indicators are set up, and a lean risk management team is formed. Crisis warning signals are continuously tracked and released, and processes and asset quality management are continuously improved. A lean risk control system is established to reduce risk losses and create benefits for the enterprise.

Финансирование лизинговых проектов в условиях макроэкономической нестабильности

The study identifies the place of leasing in the Russian financial system, and evaluates the dependence of the volume of new business in the leasing industry on such macroeconomic indicators as the GDP growth rate and the level of the key rate in the country. The volume of a new business is as a numerical indicator showing the amount of transactions concluded over a certain period for which purchased equipment was leased. This information might be useful for the leasing companies to set goals for the volume of leasing projects, based on the macroeconomic situation, and to assess their risks. The object of the study is the Russian leasing market (a set of leasing projects), including the relationship of leasing companies with other financial institutions — banks and insurance companies; the subject is the volume of new business.

Потенціал розвитку фінансового лізингу в Україні

In modern conditions, the market of financial leasing services occupies a prominent place in the economy of developed countries. Financial leasing is a kind of symbiosis of lending and renting, it has a number of sig­nificant advantages for ensuring and expan­ding the activities of business entities due to the replenishment of their investment income, a convenient source of financing, the possibility of using modern and often expensive equipment without significant costs, modernization of production and normalization of the financial and economic state of business, which invi­gorates the development of the country’s economy as a whole. In Ukraine, despite 30 years of development, financial leasing has repeatedly encountered difficulties, including the problems of the origin and formation of the leasing services market (90s), imperfect legislation, the decline during the financial crisis and post-crisis recovery, and currently – fun­ctioning in the conditions of war. The economic instability of the past years and the conditions of the present significantly affect the pace of development of the leasing industry, and therefore its recovery is currently a matter of time. The growth of the financial leasing market in conditions of a pandemic, economic recession and martial law makes it necessary to have a clear mechanism for regulating leasing acti­vities. The priority reference point is the European experience, the study of which in the framework of strengthening the innovative focus of the development of the domestic economy will make it possible to choose a relevant model of the functioning of the modern financial leasing market. The aim of the article is to determine the regulatory requirements in the field of leasing activity, the key vectors of the development of the domestic market of financial leasing services in the context of European integration. To achieve the aim, scientific methods of analysis, synthesis, systematization, graphic and generalization were applied. It was established that, despite a number of problems, the leasing market of Ukraine still has all the prospects of becoming one of the powerful markets of the Central and Eastern Europe region. In this direction, it is urgent to strengthen financial literacy among the population and business entities regarding the understanding of leasing as an innovative way of purchasing equipment and a flexible business financing tool, ensuring an increase in the level of penetration of leasing into the domestic economy, expanding the spheres of attracting external financing, developing state programs, developing vendor financing.

Improving Leasing Viability: A comprehensive analysis of customer credibility checks and trustworthiness

The contemporary leasing landscape is marked by increasing complexity and risk, necessitating rigorous customer credibility checks as a critical safeguard for lessors. This research paper delves into the multifaceted realm of customer credibility checks, shedding light on their paramount importance in the leasing industry. Central to this study are the diverse methods employed to assess customer credibility. Comprehensive coverage is provided on widely adopted approaches, including credit rating, GST analysis, balance sheet analysis, cash flow analysis, and profit and loss analysis. Through detailed examination, the paper unveils the strengths and limitations of each method, facilitating a nuanced understanding of their applicability in different leasing scenarios.

Vehicle leasing credit risk assessment modeling by applying extended logistic regression

In vehicle leasing industry which presents a great business opportunity, information completed by applicants was assessed and judged by leasing associates manually in most cases; therefore, assessment results would be affected by their personal experience of leasing associates and decisions would be further affected accordingly. There are few researches on applicant credit risk assessment due to not easy to obtain of vehicle leasing data. Further, the difficulty in vehicle leasing risk assessment is increased due to class imbalance problems in vehicle leasing data. In order to address such issue, a research on credit risk assessment in vehicle leasing industry was conducted in this study. The great disparity in the ratio of high risk and low risk data was addressed by applying synthetic minority over-sampling technique (SMOTE). Then, classification effect of risk assessment model was improved by applying logistic regression in a two-phase manner. In the section of empirical analysis, the feasibility and effectiveness of the approach proposed in this study was validated by using data of actual vehicle leasing application cases provided by a financial institution in Taiwan. It is found that the proposed approach provided a simple yet effective way to build a credit risk assessment model for companies that provide vehicle leasing.

A Study on the Development of China’s Financial Leasing Industry Based on Principal Component Analysis and ARIMA Model

The sustainable development of China’s financial leasing industry is a growing concern among scholars. This paper analyzes the development data of China’s financial leasing industry from 2008–2021, using the dimensions of scale, speed, efficiency, structure, and quality. By employing principal component analysis, we construct the development index of China’s financial leasing industry and analyze the reasons for changes in the development level of the industry from the internal structure of the index. The study finds that scale serves as a key factor in the development of China’s financial leasing industry. While the contribution value of the structure factor shows fluctuations, the contribution values of the return and risk factors remain relatively stable. Using the ARIMA (Auto Regressive Integrated Moving Average) prediction model based on the principal component analysis, we establish the prediction model of the financial leasing industry change in the coming years. The study reveals that the financial leasing industry has entered a period of transformation, where the growth rate of its scale has dropped. Furthermore, this paper offers proposals to address the increasingly prominent asset-liability maturity mismatch problem, promote business structure optimization, enhance the contribution value of the structure factor and the income factor, and facilitate sustainable, higher-quality industry development.

Is the aircraft leasing industry on the way to a perfect storm? Finding answers through a literature review and a discussion of challenges

Since the emergence of the first private aircraft leasing companies in the 1970’s, the airline industry has undergone tremendous changes. Supported by several decades of growing demands and rising world economies, the share of leased aircraft across airlines worldwide has grown steadily, exceeding 50% for the first time during the peak of the COVID-19 pandemic. Given that earlier research has quantified the optimal lease rate for an airline between 40% and 60%, the industry might be facing challenges soon — potentially counteracting the recent recovery from COVID-19. This study reviews the existing research on aircraft leasing; a subject which has been rather scattered in the literature for the past few decades. We summarize more than 70 scientific papers published on aircraft leasing and closely related subjects. Based on the dissection and categorization of existing studies, we derive a set of important challenges for the aircraft leasing industry, which should be addressed by the community.

ALTERNATİF FONLAMA YÖNTEMİ OLARAK LEASING SEKTÖRÜ: TÜRKİYE FİNANSAL KİRALAMA PİYASASI ÖRNEĞİ

This paper aims to provide a general assessment of leasing industry with particular reference to financial lease market in Turkey. It is a very well-known fact that apart from the banks, the leading financial institutions that give loans to firms, there exist some other financial institutions that provide funding for the financial needs of the companies. One of these are known to be leasing companies. They enable companies to conduct their business by providing long-term funding for their investment projects. This paper analyses this industry in general and then furnish recent information in regard to the financial lease market in Turkey.

Motivation Analysis of Market and Institution on Corporate Leasing Financialization from the Perspective of Regulatory Arbitrage: Evidence from Chinese Listed Companies

In recent years, more and more real enterprises speculate and arbitrage in the financial market by participating in financial institutions, and the financialization of micro enterprises has become a general trend. However, the empirical conclusions of existing literature from different dimensions of enterprise development are not consistent. This paper uses the data from Shanghai and Shenzhen A-share companies from 2007 to 2019 to perform an empirical analysis on the market and institutional motivations of the entity enterprises’ sharing and holding financial leasing companies (SHFL). It is found that the fundamental reason for enterprises to SHFL is the profit gap between the financial industry and the real industry. The more intense the industry competition, the lower the profit rate, the larger the spread, and the stronger the incentive to SHFL. In addition, the continuous improvement of the national system construction in the financial leasing industry has played an essential role in promoting it. In the heterogeneity analysis, it is found that private enterprises are also motivated to ease financing constraints except interest rate spread. On the contrary, they are not significant in the sample of state-owned enterprises. Equipment manufacturing industries have both narrowing interest rates and equipment promotion motivation, while the non-equipment manufacturing industry has no such characteristics. Finally, the limitations and future research directions of this paper are discussed.

EVOLUTION OF THE INTERNATIONAL MARKET OF LEASING SERVICES

The current stage of the development of the international economy is characterized by the activation of globalization trends, among which one of the most promising forms of international cooperation, which has significant prospects, is international leasing. Today, leasing operations have become an integral part of the development and stabilization of the world economy. The growth and expansion of the global leasing market is a natural fact of the processes of globalization and integration of both production and the financial sphere. If there is a need to modernize the economy, the use of a leasing approach to financing investments plays a significant role. Being one of the most effective types of investment, leasing is widely used in all countries of the world. In developed countries, the total volume of transactions related to leasing has increased 5 times over the past 15 years. Leasing can be attributed to the form of financing investment projects, which has proven itself in global practice as quite effective for enterprises and in general for the deployment of the investment process The article examines the peculiarities and problems of international leasing as an integral part of the development and stabilization of the world economy. It was revealed that the formation and development of the international market of leasing services is connected not only with the intensive development of production activity, but also with the division of labor in the system of global economic relations. An analysis of the functioning of the international leasing market was conducted, which confirms its maximum convenience and flexibility for business development and expansion. It is shown that the growth and expansion of global leasing services is a natural fact of the processes of globalization and integration of both production and the financial sphere. It is noted that despite the global economic crisis, the leasing industry is constantly expanding, and leasing markets are increasing the scope of new business. It has been confirmed that today the world market of leasing services is successfully overcoming crisis situations in the world economy and demonstrates a significant increase in the consumption of leasing services in various regions and countries of the world.

The Ukrainian Conflict: Impact on the Aviation Finance and Leasing Industry

The conflict between Russia and Ukraine has resulted in additional burdens on the aviation industry, compounding the impact of the COVID pandemic. Airline manufacturers and operators are suffering extra costs due to the steep rise in commodities prices, especially those linked to energy costs, and the decline in the supply of crucial manufacturing materials like titanium, as a result of supply chain issues and sanctions. The sanctions, led by the United States and the European Union, impacted Russia multilaterally. They included prohibiting the transfer of maintenance materials and technologies; forbidding aircraft leases to Russian operators; airspace closure; and suspension of airworthiness certificates. Russia responded to the sanctions by suspending bilateral agreements and unilaterally re-registering leased aircraft in Russia. Russia’s responses have impeded aircraft lessors seeking to repossess their assets and forced an inevitable write-down of asset values, leading lessors and financiers to file insurance claims. This has dampened the global aviation finance and ABS markets.

Counterproductive work behavior, job stress, trait emotional intelligence and person organization fit among employees of leasing industry in Indonesia

Purpose: This study aims at comprehending counterproductive behavior from negative workplace situations, namely job stress. As job stress is an individual attitude, trait emotional intelligence (EI) was considered the determinant factor. In addition, the effect of person-organization (PO) fit was also scrutinized as a predictor of job stress.Design/methodology/approach: The study used quantitative surveys in the leasing industry of Indonesia. 88 valid responses were used in the analysis. The analysis was conducted using Structural Equation Modelling with the help of the Smart PLS. The variables were measured using robust indicators from previous studies.Findings: The results confirmed three meaningful relationships between counterproductive work behavior, job stress, trait EI and PO fit. Specifically, the analysis found a negative association between trait EI and job stress. It also revealed the negative effect of PO fit on job stress. However, the study failed to provide empirical evidence to support the relationship between job stress and counterproductive work behavior.Research Limitations: This study has low generalization power since it did not construct from large sample size. Future research efforts should consider adding alternative dimensions that could help to better understand and predict CWB.Practical and Social Implications: This study provides guidelines for practitioner to select and promote high EI candidates since they are proven to be less susceptible to stress. This study also suggests companies to align working atmosphere with employees’ characteristics. It also contributes to social interaction in the workplace by pointing companies to establish less stressfully work atmosphere.Originality/value: This study considers alternative procedures to measuring counterproductive work behavior compared to those used in previous studies. Additionally, this study includes both personal or individual characteristics and interaction between the person and the organization to predict job stress.

Research on the Sustainable Development and Dynamic Capabilities of China’s Aircraft Leasing Industry Based on System Dynamics Theory

The Boeing 737 MAX crisis and COVID-19 pandemic have seriously influenced the development of China’s aircraft leasing industry in the past two years. This paper applies system dynamics theory to explore the sustainable development of China’s aircraft leasing industry. It analyses the dynamic mechanism and constructs a system dynamics model. Based on China’s macroeconomic data and historical data from the financial, aviation, and leasing industries, it aims to stimulate the development of China’s aircraft leasing industry in the next five years. Through sensitivity analysis, this research finds that changes in GDP growth have the most obvious impact on the sustainable development of China’s aircraft leasing industry. Reducing the average financing cost and the income tax rate of aircraft leasing companies, increasing their investment in talent, and controlling risk will increase the market share of China’s aircraft leasing companies and promote the development of the industry. However, increasing the number of aircraft leasing companies has little effect on market share. On this basis, this paper proposes policy recommendations to promote the sustainable development of China’s aircraft leasing industry.

Risk management in SMEs: Status quo and areas for future research in the German leasing industry

PURPOSE: The purpose of the present research note is to give an overview of research in the field of risk management in leasing SMEs as well as to present fields for future research. It intends to encourage other researchers to fill the current gap in research on risk management in general and on risk management in (German leasing) SMEs in particular. DESIGN/METHOD: The research note is based on interviews with 40 German leasing firms, thereof 35 SMEs. Qualitative research was chosen due to the nascent knowledge area and to explore cause-effect- -relationships as well as to gain a deeper understanding of the practical requirements on risk management. RESULTS/FINDINGS: A research framework was presented based on the findings of the literature review. Based on the interviews, the framework could be drilled down into more operative, leasing-specific topics. Amongst others, it could be found that the risk management organisation is greatly shaped by the underlying risk strategy, the motivation for risk management, as well as the essential risks. These three elements form the basis for the operative and strategic risk management practice. Furthermore, it was differentiated in the different lifecycle phases of risk management. ORIGINALITY/VALUE: The presented research note is based on the first known research in the field of risk management for German leasing SMEs with a comparable number of interviews. Therefore, this research note includes a high degree of novelty. Adapting the findings in practice as well as combining it with other research questions might add significant value to risk management research as well as practice not only limited to the German leasing industry. KEYWORDS: risk management, small and medium-sized enterprises (SMEs), leasing, financial services, Germany. JEL: A12, D81, G32

Risk management in SMEs: Status quo and areas for future research in the German leasing industry

PURPOSE: The purpose of the present research note is to give an overview of research in the field of risk management in leasing SMEs as well as to present fields for future research. It intends to encourage other researchers to fill the current gap in research on risk management in general and on risk management in (German leasing) SMEs in particular. DESIGN/METHOD: The research note is based on interviews with 40 German leasing firms, thereof 35 SMEs. Qualitative research was chosen due to the nascent knowledge area and to explore cause-effect- -relationships as well as to gain a deeper understanding of the practical requirements on risk management. RESULTS/FINDINGS: A research framework was presented based on the findings of the literature review. Based on the interviews, the framework could be drilled down into more operative, leasing-specific topics. Amongst others, it could be found that the risk management organisation is greatly shaped by the underlying risk strategy, the motivation for risk management, as well as the essential risks. These three elements form the basis for the operative and strategic risk management practice. Furthermore, it was differentiated in the different lifecycle phases of risk management. ORIGINALITY/VALUE: The presented research note is based on the first known research in the field of risk management for German leasing SMEs with a comparable number of interviews. Therefore, this research note includes a high degree of novelty. Adapting the findings in practice as well as combining it with other research questions might add significant value to risk management research as well as practice not only limited to the German leasing industry. KEYWORDS: risk management, small and medium-sized enterprises (SMEs), leasing, financial services, Germany. JEL: A12, D81, G32