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Journal of Financial Services Research

, Volume 46, Issue 2, pp 137–175 | Cite as

Why Do Banks Provide Leasing?

  • Dilek Bülbül
  • Felix Noth
  • Marcel Tyrell
Article

Abstract

Banks are engaging in leasing activities at an increasing rate, which is demonstrated by aggregated data for both European and U.S. banking companies. However, little is known about leasing activities at the bank level. The contribution of this paper is the introduction of the nexus of leasing in banking. Beginning from an institutional basis, this paper describes the key features of banks’ leasing activities using the example of German regional banks. The banks in this sample can choose from different types of leasing contracts, providing the banks with a degree of leeway in conducting business with their clients. We find a robust and significant positive impact of banks’ leasing activities on their profitability. Specifically, the beneficial effect of leasing stems from commission business in which the bank acts as a middleman and is not affected by the potential defaults of customers.

Keywords

Leasing Bank performance 

JEL Classification

G21 G32 L11 

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Goethe University FrankfurtFrankfurtGermany
  2. 2.Zeppelin UniversityFriedrichshafenGermany

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