Leasing Puzzle in Polish Small Firms Listed on the Alternative Market

Variable	Leasing		Bank loan

	lfina	lfink	Lcred	lcred
div	−0.0004***	−0.0005***	0.0062*	0.0062*
	(0.0000)	(0.0001)	(0.0038)	(0.0038)
lcredlong	−0.0003	−0.0001
	(0.0002)	(0.0002)
lcred	0.0016***	0.0011***
	(0.0002)	(0.0002)
lfina			0.0089**
			(0.0046)
lfink				0.0020**
				(0.0009)
finass	−0.0008***	−0.0008***
	(0.0002)	(0.0002)
liq	0.0001*	0.0001*	0.0021	0.0021
	(0.0000)	(0.0000)	(0.0015)	(0.0015)
firm size	0.0001***	0.0001***	0.0035***	0.0035***
	(0.0000)	(0.0000)	(0.0007)	(0.0007)
construction	0.0004***	0.0004**
	(0.0002)	(0.0002)
cons	−0.00003	0.0001	−0.0014	−0.0013
	(0.0002)	(0.0002)	(0.0077)	(0.0077)
Wald test	181.79***	148.60***	29.78***	30.53***
LR test	404.49***	402.52***	597.54***	598.46***
Number of observations	1,779	1,779	1,779	1,779
Number of groups	400	400	400	400

Variables used in logit and tobit models

Type of variable	Variable definition
Dependent variables	$\begin{matrix} i f i n a = \frac{payments due to financial leasing}{total assets} * \\ i f i n k = \frac{payments due to financial leasing}{equity} * \end{matrix}$ $\begin{align} & \mathbf{ifin}\,\mathbf{a}=\frac{\text{payments due to financial leasing}}{\text{total}\,\text{assets}}* \\ & \mathbf{ifin}\,\mathbf{k}=\frac{\text{payments due to financial leasing}}{\text{equity}}* \\ \end{align}$
	lfin = binary variable indicating usage of financial leasing, assuming the value of 1 if the company uses leasing for financing; and 0 otherwise
Main independent variables	$\begin{matrix} I c r e d = \frac{financial liablities (credit and loans) - payments due to leasing}{total assets} \\ I c r e d l o n g = \frac{long - term credit and loans - payments due to leasing}{total assets} * \end{matrix}$ $\begin{align} & \mathbf{Icred}=\frac{\text{financial liablities }\left( \text{credit and loans} \right)-\text{payments due to leasing}}{\text{total assets}} \\ & \mathbf{Icredlong}=\frac{\text{ long}-\text{term credit and loans}-\text{payments due to leasing}}{\text{total assets}}* \\ \end{align}$
	trade, service, manufacturing, construction – binary variables representing particular industries; firm size –size of the company defined with natural logarithm of revenue
Other independent variables	$\begin{matrix} l i a b = \frac{total liabilities (without leasing)}{total assets} \\ I t I = \frac{long - term liabities (without leasing)}{total assets} \\ r o a - return on fixed assets \\ c u r a s s = \frac{financial assets}{total assests} \\ l i q - liquidity ratio = \ln (1 + \frac{currents assets}{short - term liabilities}) \\ f i x a s s = \frac{fixed assets}{current assets} \end{matrix}$ $\begin{align} & \mathbf{liab}=\frac{\text{total liabilities }\left( \text{without leasing} \right)}{\text{total assets}} \\ & \mathbf{ItI}=\frac{\text{long}-\text{term liabities }\left( \text{without leasing} \right)}{\text{total assets}} \\ & \mathbf{roa}-\text{return on fixed assets} \\ & \mathbf{curass}=\frac{\text{financial assets}}{\text{total assests}} \\ & \mathbf{liq}-\text{liquidity ratio}=\ln \left( 1+\frac{\text{currents assets}}{\text{short}-\text{term liabilities}} \right) \\ & \mathbf{fixass}=\frac{\text{fixed assets}}{\text{current assets}} \\ \end{align}$
	div – binary variable representing the dividend payment, assuming the value of 1 if there was no dividend payment and 0 if the company paid a dividend em – financial leverage ratio

Comparison between leasing and investment bank loan

Criteria	Leasing	Bank Loan
Subject of the agreement	Asset permitted for conduct of civil law transaction	Funds for a specific purpose
Creditworthiness	Does not reduce creditworthiness	Reduces creditworthiness
Award procedure for a contract	Simplified and shorter than in the case of loan	More demanding and strict (business plan, financial statement, certification for not being in arrears with liabilities towards Tax Office and Social Security Office (ZUS))
Tax shield	Higher benefits	Lower benefits
VAT settlement	Paid within the maturity on every leasing payment at 23% rate	Paid at the time of purchase of specific fixed asset; VAT has to be financed until the moment of settling its quota with taxable VAT on sales
Security	Leased asset	Borrower submits credit risk analysis, has to show the business plan and agree upon design provision compatible with law
Company’s maturity	Minimum 3 months	Minimum 6 months
Own contribution	To be negotiated (typically minimum 10% of asset’s value)	To be negotiated, typically 20%
Insurance of an asset	Typically required, which makes up for additional cost	Always additional cost (a loss for lessor limited to value of contribution)
Total financing costs	Typically higher than in the case of bank loan	Slightly lower, sometimes net costs after inclusion of a tax shield may be higher than in the case of leasing

Explanatory variables used in studies and the direction of the linear relationship between them and the dependent variable

Author	Positive	Negative
Deloof (2007)	Percentage of change in total assets	Long-term debt without leasing/total assets
	Current assets/total assets*	Gross profit, after exclusion of extraordinary result and interest/total assets
	Financial assets/total assets
Finucane (1988)	Total debt/assets	Subordinated debt/total assets
	Number of issued bonds	Leasing restrictions (binary variable)
	Mortgage loan (binary variable)
	Rating of issued bonds
Ang and Peterson (1984)	Current financial liquidity = current assets/short- term debt	Return on assets
	Change in sales	Operating leverage
	Current assets/total assets*
Yan (2006)		Dividend payment (binary variable)
		Book value of total debt including market value of equity/book value of assets
		Book value of total debt without financial leasing/sum of book value of assets and operating leasing
		Book value of long-term debt without financial leasing/sum of book value of assets and operating leasing
Cosci et al. (2015)	Income tax/operating profit	Book value of total debt/total assets
	Net trade loan	Current assets/current debt
		Firm’s age
		Exporting firm (binary variables)

Leasing industry entities belonging to Polish Leasing Association

Entities Related to Banks (Financial Institutions)	Independent Entities
Europejski Fundusz Leasingowy S.A.	Afk Leasing Polska S.A.,
mLeasing Sp. z o.o.	BMW Financial Services Sp. z o.o.,
BZ WBK Leasing S.A.	Caterpillar Financial Services Poland Sp. z o.o.
Getin Leasing S.A.	De Lage Landen Leasing Polska S.A.
Pekao Leasing Sp. z o.o.	Fraikin Polska Sp. z o.o.,
Deutsche Leasing Polska S.A.	IKB Leasing Polska Sp. Z o.o.,
BNP Paribas Lease Group Sp. z o.o.	Impuls-Leasing Polska Sp. Z o.o.,
Millennium Leasing Sp. z o.o.	Leasing Polski Sp. Z o.o.,
Raiffeisen- Leasing Polska S.A.	Mercedes-Benz Leasing Polska Sp. z o.o.,
Alior Leasing Sp. z o.o.	Noma 2 Sp. z o.o.,
Idea Leasing S.A.	Orix Polska S.A.
ING Lease Sp. z o.o.	Polski Związek Wynajmu i Leasingu Pojazdów
Santander Consumer Multirent Sp.zo.o.	Scania Finance Polska Sp. z o.o.,
PKO Leasing Sp. Z o.o.	SG Equipment Leasing Polska Sp. z o.o.
	SGB Leasing Sp. z o.o.
	Siemens Finance Sp. Z o.o.
	VFS Usługi Finansowe Polska Sp. z o.o. VolkswagenLeasing GmbH Sp. z o.o. Oddział w Polsce

Basic descriptive statistics of variables used in the study

Variables	Number of observations	Average value of variable	Standard deviation	Minimum value of variable	Maximum value of variable
lfin	1,907	0.3335	0.4716	0	1
lcredlong	1,907	0.0596	0.1203	0	1
lcred	1,907	0.0787	0.1473	0	0.9
liab	1,907	0.3777	0.4326	0	1.3086
lfina	1,897	0.0147	0.3895	0	16.9083
lfink	1,897	0.0607	1.7142	0	73.3148
div	1,907	0.9082	0.2888	0	1
ltl	1,907	0.1113	0.2234	0	2
roa	1,907	0.0597	0.1326	0	1
curras	1,897	0.5178	0.3087	0.0002	1
finass	1,897	0.0785	0.1845	0	0.9968
liq	1,907	1.1361	0.8609	0.0007	4.4999
fixass	1,897	7.9183	28.7171	0	209
firm size	1,789	8.1756	2.1453	0	14.9479
em	1,907	2.3115	2.5307	0	18.5000
trade	1,907	0.2045	0.4034	0	1
service	1,907	0.6130	0.4872	0	1
manufacturing	1,907	0.1012	0.3017	0	1
construction	1,907	0.0818	0.2741	0	1

Determinants of probability of financing investment in fixed assets with leasing –logit model

Variables	logit lfin
lcred	5.1214***
	(0.7542)
lcredlong	−0.5170
	(0.9051)
finass	−3.2233***
	(0.8272)
manufacturing	−0.9696*
	(0.5648)
firm size	0.6956***
	(0.0825)
losltl	1.0230***
	(0.3525)
div	−1.3006***
	(0.3369)
cons	−6.1004
	(0.8170)
Wald test	135.76***
LR test	319.18***
Number of observations	1,779
Number of groups	400

eISSN:: 2543-6821
Language:: English

Publication timeframe:: Volume Open
Journal Subjects:: Business and Economics, Political Economics, Economic Theory, Systems and Structures, Microeconomics, Macroecomics, Public Finance and Fiscal Theory

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Leasing Puzzle in Polish Small Firms Listed on the Alternative Market

Published Online: May 07, 2019

Page range: 25 - 39

DOI: https://doi.org/10.2478/ceej-2018-0006

Keywords
financial leasing, tobit, logit, small listed companies

© 2018 J. Jaszczuk, A. Białek-Jaworska, K. Opolski, M. Sylwestrzak, K. Trzpioła, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Fig 1

Determinants of financing investment in fixed assets with leasing – tobit model

Variables used in logit and tobit models

Comparison between leasing and investment bank loan

Explanatory variables used in studies and the direction of the linear relationship between them and the dependent variable

Leasing industry entities belonging to Polish Leasing Association

Basic descriptive statistics of variables used in the study

Determinants of probability of financing investment in fixed assets with leasing –logit model

Leasing Puzzle in Polish Small Firms Listed on the Alternative Market

Published Online: May 07, 2019

Page range: 25 - 39

DOI: https://doi.org/10.2478/ceej-2018-0006

Keywordsfinancial leasing, tobit, logit, small listed companies

© 2018 J. Jaszczuk, A. Białek-Jaworska, K. Opolski, M. Sylwestrzak, K. Trzpioła, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Fig 1

Determinants of financing investment in fixed assets with leasing – tobit model

Variables used in logit and tobit models

Comparison between leasing and investment bank loan

Explanatory variables used in studies and the direction of the linear relationship between them and the dependent variable

Leasing industry entities belonging to Polish Leasing Association

Basic descriptive statistics of variables used in the study

Determinants of probability of financing investment in fixed assets with leasing –logit model

Keywords
financial leasing, tobit, logit, small listed companies