The Relationship Between Leasing Contract, Internal And External Factors With Default Risk Of Leasing Companies In Iran
Loading...
Date
2015-08
Authors
AMANOLLAHI, GHOLAMREZA FARSAD
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
Leasing companies undertake numerous business activities among themselves. Such complex relationships imply that in the aftermath of a leasing failure, there has been spillover effects on other financial institutions, banks and industries. Most of the existing studies are related to the banking systems and there is not many literature on the leasing industry. This dissertation attempts to fill this gap. This research is one of the few studies which examines default risk in the leasing industry. The aim of this research is to investigate the relationship between leasing contract, firm’s internal factors, external factors and default risk of leasing companies in Iran. It is hoped that this research would further enrich the literature on the leasing industry in Iran. The present study uses the data from 34 leasing companies in Iran, for the period from 2005 to 2012, to identify the determinants of default. For the current research, an eight year period was taken into consideration, from early 2005 to late 2012. This thesis use 13 variables, that is, 1 dependent variable and 12 independent variables. The dependent variable is the default risk and independent variables are in the three categories namely, firm’s contract, firm’s internal factors, and external factors. This study uses panel data of leasing companies in Iran. The theory of default risk, the theory of cash flow, agency theory, resource dependency theory, theory of sovereign lending, default theory of lending and ruin theory, are used for measuring the external and internal factors. The combined evidences suggest that a firm’s contract conditions, such as upfront prepayment, credit insurance contract, security deposits, time and period of contract, collateral and guarantees, contract amount, as well as
external factors, such as interest rate, inflation, foreign exchange,Growth gross domestic product, infrastructure, and default are determinants in the policy-making process, involving the leasing sector in Iran. Furthermore, the empirical results indicate that a firm’s internal factors, such as the size of leasing and ownership are not significant determinants of default. The results of this dissertation provide several implications for policy-makers in the leasing industry. Policy-makers would benefit by employing different procedures for leasing activities. This study also provides a beneficial industrial and business experience concerning the relationship between default risk and leasing.
Description
Keywords
The Relationship Between Leasing Contract, Internal And External Factors , With Default Risk Of Leasing Companies In Iran