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Leasing, legal environments, and growth: evidence from 76 countries

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  • Na Zhang

    (Fudan University)

Abstract

Leasing is one of the most important sources of external financing for corporate firms. This paper uses data from 76 countries to examine how legal environments affect firms’ leasing behavior. The results suggest that leasing is used less in countries with weak legal environments: Firms in countries with weak legal environments tend to avoid leasing contracts, because the contracts are costly to enforce. I also find that leasing has a measurable impact on both firm growth and GDP growth. Leasing can increase the availability of capital, improve operational efficiency and, as a result, potentially contribute to growth. The results provide a policy implication, by which possible adjustments in a legal system can facilitate the availability of leasing, which may in turn generate real economic gains.

Suggested Citation

  • Na Zhang, 2018. "Leasing, legal environments, and growth: evidence from 76 countries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 42(4), pages 746-764, October.
    • Handle: RePEc:spr:jecfin:v:42:y:2018:i:4:d:10.1007_s12197-017-9419-5
    DOI: 10.1007/s12197-017-9419-5
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    References listed on IDEAS

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    More about this item

    Keywords

    Leasing; Legal environments; Growth;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)

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