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Ownership, diversification and cost advantages: Evidence from the Italian leasing industry

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  • Degl’Innocenti, Marta
  • Girardone, Claudia

Abstract

Using Greene's (2005) random parameter cost frontier model and a unique hand-collected dataset, this paper provides novel evidence on the cost advantages of Italian leasing companies over 2002–2008, focusing on ownership structures and diversification strategies. Results suggest that cost efficiency and economies of scale have decreased significantly over the period analyzed. Bank-related, independent and domestic leasing companies are more able to control costs than their captive and foreign counterparts. Diversification strategies can be crucial in determining the cost effectiveness of leasing firms. Nonetheless, smaller, independent and less diversified leasing firms appear to benefit from higher economies of scale and greater technological advancements.

Suggested Citation

  • Degl’Innocenti, Marta & Girardone, Claudia, 2012. "Ownership, diversification and cost advantages: Evidence from the Italian leasing industry," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 22(4), pages 879-896.
    • Handle: RePEc:eee:intfin:v:22:y:2012:i:4:p:879-896
    DOI: 10.1016/j.intfin.2012.05.002
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    2. Degl’Innocenti, Marta & Girardone, Claudia & Torluccio, Giuseppe, 2014. "Diversification, multimarket contacts and profits in the leasing industry," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 31(C), pages 231-252.

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    More about this item

    Keywords

    Efficiency; Leasing industry; Random parameter frontier model; Diversification strategies; Ownership structures;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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