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Leasing and business cycles

Author

Listed:
  • Na Zhang

    (Fudan University)

Abstract

This paper demonstrates that leasing, one of the most important sources of external finance, is countercyclical over business cycles. Leasing is easier to finance and provides operational flexibility, although it costs more in the long run. The benefits of leasing are particularly important to firms with financial constraints and high uncertainty. Also, firms face tighter financing conditions and higher uncertainty during recessions. Therefore, leasing is more attractive during recessions than booms.

Suggested Citation

  • Na Zhang, 2018. "Leasing and business cycles," Economics Bulletin, AccessEcon, vol. 38(1), pages 262-270.
    • Handle: RePEc:ebl:ecbull:eb-17-00585
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2018/Volume38/EB-18-V38-I1-P26.pdf
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    More about this item

    Keywords

    Leasing; capital structure; firm financing; business cycles;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • G3 - Financial Economics - - Corporate Finance and Governance

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