The Use of Leasing by Firms

The structured interviews conducted with lessors provided considerable insight into leasing activity in the UK and into the role of leasing in relation to investment behaviour. The results suggest that the use of leasing has led to both a higher level of investment expenditure and to favourable retiming of it (by bringing it forward in times of recession) largely through tax incentives, although other important determinants were also identified. While the evidence gathered from lessors has delineated possible effects of leasing on firms’ investment decisions, it is primarily useful as a guide to obtaining further conclusive information since it provides largely subjective data which are dependent upon the interviewees’ perception of factors that affect investment through leasing. Clearly, it is not reasonable simply to assume that the factors considered by lessors to be significant in the investment process will necessarily coincide with those perceived by lessees. Consequently, in order to extend the basic background analysis, a postal questionnaire survey of leasing behaviour was undertaken with the express intention of obtaining data from actual decision-makers in individual firms.