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Leasing, a Solution to Credit Rationing

Author

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  • Georgescu Maria - Andrada

    (National School of Political Studies and Public Administration)

Abstract

In this paper, we shall examine if leasing is a solution to credit rationing, considering that the limiting of the bank credit supply will determine the orientation of enterprises towards leasing. This argument was brought in the specialty literature by [9]. They consider leasing “the last financing resort”. The statement is justified by the rights the lessors have in case of bankruptcy of the user company. For [9], unlike the previous works, the comparison must not be made between leasing and the ordinary debt, but between leasing and secured debt. The weighing of the advantages and limits of the two forms of financing will allow the analysis of the choice of financing by the enterprises, when the constraints of the capital supply force them towards expensive solutions. In a first section, we shall introduce the concept of credit rationing and we shall analyze its effects on the financing policy of the enterprise. Then, we shall appreciate the qualities of leasing, respectively of the secured debt, and we shall justify the nature of the financing mobilized by the companies when the bankruptcy risk increases.

Suggested Citation

  • Georgescu Maria - Andrada, 2010. "Leasing, a Solution to Credit Rationing," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 1602-1607, May.
    • Handle: RePEc:ovi:oviste:v:10:y:2010:i:1:p:1602-1607
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    More about this item

    Keywords

    leasing; credit rationing; financing policy; qualities of leasing; bankruptcy risk.;
    All these keywords.

    JEL classification:

    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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