Market Structure As Determinant: The Case Of Leasing In Banking Industry Transformation In Central And South Eastern Europe

8th Global Conference on Business & Economics

EUROPAINSTITUT

WIRTSCHAFTSUNIVERSITÄT WIEN

ISBN : 978-0-9742114-5-9

EUROPAINSTITUT

UNIVERSITY OF ECONOMICS AND

BUSINESS ADMNISTRATION VIENNA

Market Structure as Determinant: the Case of Leasing in

Banking Industry Transformation in Central and South

Eastern Europe

E LISABETH K ICHLER AND P ETER H AISS

1

Paper for presentation at the 8 th Global Conference on Business & Economics,

Florence, Oct. 18-19, 2008

Abstract

As bank credit supply was hampered by a market structure exemplified by weak creditor right enforcement during the early years of transition in Central and Eastern Europe (CEE) and South Eastern Europe (SEE), leasing became an important substitute and entry strategy for foreign banks. Traditional discussions of the financial industry concentrate on bank loans only and rather neglect alternative forms of finance. We analyse the relevance of leasing in CEE and SEE in comparison to bank loans and give an overview of the industry structure of leasing providers. We suggest that (1) legal deficiencies play an important role in the current market structure, that (2) leasing represents an underestimated part of the financial industry in transition economies and (3) that leasing can play an important role in market development.

Key Words: financial industry transformation, leasing, market structure, regulation and development

Elisabeth Kichler

Graduate student, University of

Economics and Business

Administration, Vienna, Austria

Althanstrasse 39-45/2/3

A-1090 Wien, Austria phone +43 (0) 650 7202409 fax +43 (0) 1 313 36- 758 elisabeth.kichler@gmx.at

Peter R. Haiss

Lecturer, EuropaInstitut,

University of Economics and

Business Administration,

Vienna, Austria

Althanstrasse 39-45/2/3

A-1090 Wien, Austria phone: +43 (0) 664 812 29 90 fax +43 (0) 1 313 36- 758 peter.haiss@wu-wien.ac.at

1 The opinions expressed are the authors’ personal views and not necessarily those of the institutions the authors are affiliated with. The authors are indebted to research support by Marie-Therese Marek and helpful comments by Gerhard Fink and the Finance-Growth/Integration Nexus-Team at

WU-Wien, http://www.wu-wien.ac.at/europainstitut/forschung/nexus

October 18-19th, 2008

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8th Global Conference on Business & Economics ISBN : 978-0-9742114-5-9

Market Structure as Determinant: the Case of Leasing in Banking Industry Transformation in Central and South Eastern Europe

ABSTRACT

As bank credit supply was hampered by a market structure exemplified by weak creditor right enforcement during the early years of transition in Central and Eastern Europe (CEE) and South Eastern Europe (SEE), leasing became an important substitute and entry strategy for foreign banks. Traditional discussions of the financial industry concentrate on bank loans only and rather neglect alternative forms of finance. We analyse the relevance of leasing in CEE and SEE in comparison to bank loans and give an overview of the industry structure of leasing providers. We suggest that (1) legal deficiencies play an important role in the current market structure, that (2) leasing represents an underestimated part of the financial industry in transition economies and (3) that leasing can play an important role in market development.

INTRODUCTION

During the first phase of transition in the formerly centralized countries of Central and South Eastern Europe

(CEE and SEE), many state-owned enterprises were closed, restructured or privatized. The entailed evolvement of the private sector also created opportunities for small and medium enterprises (SMEs) to emerge in order to fill the arising niches. But these companies, especially SMEs, faced the problem of limited access to finance due to suboptimal market structures, i.e. weak creditor rights protection and enforcement and a resulting reluctance of banks to grant credits (Herzberg & Watson, 2007; Klapper & Sarria-Allende & Zaidi, 2002;

Pissarides, 1999; Sirtaine & Skamnelos, 2007). These structural anomalies created opportunities for alternative mechanisms to facilitate access to capital (Beck & Demirgüç-Kunt, 2006). As leasing involves a strong security advantage for the lessor due to the ownership of the asset, security arrangements and credit history provisions


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8th Global Conference on Business & Economics ISBN : 978-0-9742114-5-9 are easier met compared to bank loans. This is especially relevant to SMEs since they often cannot offer good track records and collateral and can therefore use leasing as a substitute to bank credit (IFC, 1996; Koh, 2006).

While leasing thus played a major role in financial system transformation and has gained considerable importance in recent years for the functioning of the financial industry, research on the role of leasing and other alternative forms of finance in the financial system is scarce (Moutot & Gerdesmeier & Lojschová & von

Landesberger, 2007). We close this gap by identifying the relevance of leasing in transition countries and its implications on financial market structure. Throughout this paper, we focus on twelve Central and South

Eastern European countries: Czech Republic, Hungary, Poland, Slovak Republic, Slovenia, Estonia, Latvia,

Lithuania, Croatia, Bulgaria, Romania, and Turkey. We review existing literature on credit allocation in transition countries, associated problem areas and the relevance of leasing as a substitute in Section 2. We suggest that due to the problems of credit allocation and low institutional and regulatory quality, leasing became an important substitute, especially for SMEs, and plays an important role in the financial industry in transition economies. While high loan growth rates received considerable attention in conventional financial system analyses (e.g. World Bank, 2007), we argue that the high growth rates of leasing volumes in CEE and

SEE also need ample attention. In Section 3, we also look at the importance of equipment leasing vs. real estate leasing and which types of equipment assets are leased prevailingly. In addition, the market structure (leasing providers, profile and origin of leasing companies, market concentration) is analysed. In Section 4, the main findings are discussed and Section 5 concludes. We argue that leasing represents an underestimated part of the financial industry which can play an important role for market development, especially in emerging markets.

LITERATURE REVIEW

The development of credit is the subject of numerous studies, revealing a number of provisions that are essential for adequate credit allocation. Among the most important ones are the protection of creditor and


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8th Global Conference on Business & Economics ISBN : 978-0-9742114-5-9 property rights in order to secure creditors and to make the use of collateral possible (Djankov & McLiesh &

Shleifer, 2007; Herzberg & Watson, 2007; Zoli, 2007). Although the development of creditor-friendly collateral laws is essential for the growth of credit, there is broad consent in existing literature that they are not sufficient.

To make creditor rights effective, the adequacy of court enforcement and of the legal and judiciary environment is also a crucial issue (Giannetti, 2002; Herzberg & Watson, 2007; La Porta & Lopez-deSilanes & Shleifer &

Vishny, 1997; Safavian & Sharma, 2007).

In Eastern Europe, the early years of transition were marked by a high number of non-performing loans (Breuss

& Fink & Haiss, 2004). The countries of Central and South Eastern Europe have implemented many reforms in the course of their transition process and achieved improvements in the legal environment and concerning creditor rights (Delannay & Weill, 2004). Together with improved competition through the emergence of new private banks, credit allocation could be improved and the allocation of loans to non-performing companies could be reduced (Thorne, 1993; Fink & Haiss & von Varendorff, 2007). Nevertheless, creditor rights protection and the availability of collateral are still limited (Delannay & Weill, 2004) and even more important, transition countries still lack effective legal institutions to enforce their laws (EBRD, 2006; Pistor & Raiser &

Gelfer, 2000). Peev & Yurtoglu (2007) found that CEE and SEE countries still only show low to average institutional quality.

Figure 1 depicts the institutional quality index as measured by Zoli (2007) with data from the Freedom House and the International Country Risk Guide. It ranges from 0 to 4 and includes indices of property rights, control of corruption, quality of bureaucracy, and rule of law. The graph shows that the institutional quality of the

European emerging economies is below that of the advanced market economies of the European Union and of the U.S. Concerning our country focus, especially Romania and Bulgaria lack sufficient institutional quality. In

Figure 2 we see the Borrowers and Lenders Legal Rights Index as depicted in Zoli (2007) with data from the


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Doing Business Database. It ranges from 0 to 1 and measures the degree to which the rights of borrowers and lenders are protected by collateral and bankruptcy laws. With regard to the countries we analyse, the index shows good results for the Slovak Republic and Latvia, but there are a number of countries where bankruptcy and collateral laws are not adequate, including especially Turkey, Estonia, Lithuania, Poland, and Romania.


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Credit to the private sector has shown high growth rates in Eastern European countries, mainly for shorter maturities (Backé & Zumer, 2005; World Bank, 2007). Nevertheless, the leverage rate in CEE, especially for long-term debt, is still much lower than in the mature markets of the EU-15 (Peev & Yurtoglu, 2007). Sirtaine

& Skamnelos (2007) found that the growth rates in credit volumes in the emerging countries are mostly attributable to loans to households, while corporate credit only increased slightly.

Within the corporate sector, lack of collateral and prevalent problems with property rights, bankruptcy procedures, contract enforcement and political interference inhibit credit allocation in transition countries especially to SMEs since they often lack a track record, reliable company information and collateral (Herzberg

& Watson, 2007; Klapper & Sarria-Allende & Zaidi, 2002; Pissarides, 1999; Sirtaine & Skamnelos, 2007).

Peev & Yurtoglu (2007) argue that the problem of availability of bank credit was also due to the supply side of the market since banks did not have efficient assessment tools to screen clients. Banks were inexperienced in assessing the creditworthiness of customers and thus very risk-adverse and reluctant to assign loans, especially to newly-established companies and to state-owned firms that were full of bad loans (Delannay & Weill, 2004;

Pissarides, 1999). If SMEs are awarded credits, the majority of loans are short-term and of low volume and banks usually demand high collateral because of their lack of knowledge on the assessment of the creditworthiness of clients (Klapper & Sarria-Allende & Zaidi, 2002).

These obstacles caused companies, especially SMEs, to look for alternative forms of financing. Despite the resulting high importance of equity capital, own funds and accumulated profits (Delannay & Weill, 2004), leasing was seen as an appropriate form of financing. The inappropriate legal systems in transition countries led to an insufficient protection of creditors in case of a debtor’s bankruptcy. The creditors could only assure settlement of the debts by demanding securities, but especially SMEs were often not able to provide collateral.

Leasing was found to be a solution to these problems since first of all, a lessor retains ownership of the leased


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8th Global Conference on Business & Economics ISBN : 978-0-9742114-5-9 asset which entails that the lessee does not need to allocate additional collateral. In addition, leasing offers a possibility to circumvent insufficient bankruptcy rights by offering an even higher security than a collateralized loan due to the lessor’s retained ownership of the asset. As a result, leasing typically has the highest priority in bankruptcy. Although this will also depend on the legal environment, we agree with Eisfeldt & Rampini (2007) in that it will always be easier for an owner to regain control of his asset than for a secured creditor to demand his security interest in an asset. This confirms the finding of Krishnan & Moyer (1994) who state that leasing entails lower bankruptcy costs than a secured loan.

De Haas & Naaborg (2005) found that loans to SMEs were not very prevalent during the first half of the 90s and that the inadequate legal and property rights system, deficient track records and resulting difficulties in credit screening led to a sharp increase in leasing rates during the first phase of transition, especially with

SMEs. Since the second half of the 90s, a rise in bank loans can be documented due to increased competition by foreign banks, enhanced screening and monitoring methods to assess the higher risks of SMEs and a higher cooperativeness of SMEs in providing information to banks (Eller & Haiss & Steiner, 2006). In addition, legal and accounting systems improved, leading also to an increasing safety concerning the use of collateral. Despite these improvements concerning track records of smaller companies, credit screening methods and the legal system, bank employees are still inexperienced and partly reluctant when it comes to awarding loans to riskier

SME clients and leasing still plays an important role in the financing of SMEs.

According to the experience of the International Finance Corporation, an affiliate of the World Bank providing financial assistance to developing countries, leasing has shown to be an adequate financing possibility for the private sector in transition countries, because most companies there have restricted track records, not enough collateral which can be used and because many bank are in a restructuring process (IFC, 1996).


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Koh (2006) found that due to the advantages of leasing, even companies or consumers that could have taken out a loan opted for this form of financing. Despite less strict security arrangements in views of historical financial performance and credit history, transaction costs of leasing are lower, a lease contract offers more flexibility to adjust possibly unsteady cash flows and leasing rents, leasing offers a form of off-balance financing and leasing payments are in many countries fully tax deductible (Koh, 2006). In comparison to bank loans, which often include covenants limiting corporate operations, leasing normally does not impose limitations on corporate operations, but only on the leased assets (Yan, 2002).

Realdon (2006) investigated the pricing of secured bank loans versus financial leases and found that due to the ownership of the leased asset, a lessor can actually gain from the lessee’s default, especially when the lessee has to make prepayments, whereas a secured creditor cannot. Leasing is therefore especially interesting for SMEs, because they usually have higher default probabilities and a higher necessity of making initial prepayments which in turn may reduce credit spreads and make leasing cheaper than credit taking. Krishnan & Moyer (1994) found that leasing becomes a more attractive financing alternative when bankruptcy probability increases because the bankruptcy costs of leasing are smaller for a lessor than those of credit issuance for a creditor. This in turn decreases the costs of leasing for the lessee and makes it available at lower cost than a loan. These findings go hand in hand with the study of Sharpe & Nguyen (1995) who found that low-rated firms with poor credit quality and resulting high costs of external financing show higher volumes of leasing than highly-rated companies since they can reduce their financing costs by means of leasing. Also Koh (2006) found that leasing can be offered cheaper than bank loans since delinquencies are lower.

Leasing companies are contributing to market development by enabling SMEs to access formal financing that where not available otherwise, but also by increasing financing possibilities for larger companies and municipalities. In addition, the liabilities of leasing companies help develop the capital market through


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8th Global Conference on Business & Economics ISBN : 978-0-9742114-5-9 borrowing from banks and other financial institutions and through the issuance of financial instruments like bonds (IFC, 1996). Moreover, the existence of private SMEs in transition countries assists economic development since they encourage transition by establishing a pluralistic society with independent entrepreneurs and a decentralised economy, enhancing competition and encouraging innovation. Besides that,

SMEs are important in the transition process since they take unemployed people that used to work in privatised, restructured, or state-owned companies (De Haas & Naaborg, 2005).

THE LEASING INDUSTRY STRUCTURE IN CEE AND SEE

The European leasing market

Leasing has shown high growth rates across Europe over the past decade. In 2001, Leaseurope, the European

Federation of Leasing Company Associations, reported new leasing volumes of approximately €193 billion with real estate leases making up €34 billion and equipment leasing accounting for €159 billion (Leaseurope,

2001). From 2004 to 2005, the leasing industry in Europe increased by almost 14% to a total volume of approximately €263 billion (see Table 1). In 2006, the total volume of new leases rose to €298 billion. Of that, equipment leasing accounted for €251 billion and real estate leasing for €47 billion (Leaseurope, 2006).

Leaseurope bases its statistics on data from companies that are members of the national leasing associations. In

2006, the average representativity of these companies amounted to 92.5% of the whole leasing market.

In terms of penetration, Europe is still behind the U.S. which showed a penetration rate of around 27% in 2005

(Koh, 2006), but the percentage of investments financed by leasing is steadily increasing in Europe. In 2001, the penetration rate amounted to 14%, in 2006 it already rose to 19% (Leaseurope, 2001, 2006). Koh (2006) argues that "Leasing gives loans a run for their money: the market for leasing in Europe now eclipses that of the

US as companies, consumers and the public sector increasingly favour the product over loans, much to the delight of banks”. Siemens Financial Services estimates that through asset-financing techniques, such as leasing, more than €130 billion from capital budgets could be freed up annually (Koh, 2006).


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Central and Eastern Europe (CEE) has experienced the greatest increase from year to year out of any other region in Europe (see Figure 3). In the past two years alone, the new leasing growth rate in Central and Eastern

Europe has grown by about 39% from 2004 to 2005 and by 42% from 2005 to 2006. Overall, the CEE countries averaged a 40% increase over the past two years, doubling the second and third biggest leasing market increases in Europe. In this period, the next two biggest average percentage increases in Europe could be found in the Mediterranean area with an average rise of 18% and in the Nordic sector which experienced an average increase of 17%. With this high growth rate, leasing has even outpaced loan growth in CEE. Koh (2006) argues that this high growth rate in CEE is partly due to the fact that the starting base of leasing volumes is relatively low compared to more advanced market economies. As can be seen in Table 1, the volume growth in Central and Eastern Europe mirrors the Scandinavian markets in absolute terms, but experienced the greatest relative increase from 2004 to 2005.

Figure 4 shows new leasing volumes for the twelve countries we focus on. Poland reports the highest volume of new leasing deals with €6,677 million, followed by Turkey, the Czech Republic and Hungary with €4,258,

€4,4147 million and €3,983 million, respectively. Equipment leasing clearly dominates over real estate leasing in all markets. Looking at the breakdown of equipment leasing by asset, we see that road transport vehicles and motorcars together make up the majority of equipment leases in all countries with the exception of Turkey where it only accounts for a small percentage of the total equipment leasing volume (see Figure 5). Leasing of machinery and industrial equipment clearly prevails in Turkey, but also plays an important role in the other

Eastern European countries. Data for Croatia is not available.

Leasing providers


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In the first part, this section gives an overview of the number of leasing providers in the investigated markets by profile and by origin. Croatia is excluded due to data availability. In the second part, the five biggest leasing providers of all 12 markets according to market share are displayed considering issues of market concentration, origin as well as industry affiliation. The main data sources for this overview are the European as well as national leasing associations.

Figure 6 reveals that banks play an important role in the provision of leasing services in all transition countries.

The number of independent leasing companies only exceeds the number of leasing firms from the banking industry in the Czech Republic and Romania, but independent providers play an important role in Hungary, the

Slovak Republic and Slovenia as well. In all countries, captive leasing companies only make up a small part of all leasing providers.

The involvement of international companies in the provision of leasing services is very high in Central Eastern

Europe and the Baltic countries where the majority of leasing companies are either local branches of or joint ventures with international companies (see Figure 7). Nevertheless, there are also a high number of fully or mainly national companies in the Czech Republic, Hungary, the Slovak Republic, and Slovenia. Romania and

Turkey show a different structure with a majority of national leasing companies. Especially in Turkey, the number of international providers is very low.

Turning to the largest providers in the twelve Eastern European markets, we see that market concentration is highest in the Baltic States, Slovenia, and Croatia with the biggest provider in each case holding a major part of the leasing market (see Table 2). In the Baltic countries, which are characterized by a low number of leasing companies, the five largest providers occupy almost the whole market. Lowest market concentration can be found in the Czech Republic, Hungary, Poland, the Slovak Republic, Bulgaria, Romania, and Turkey with the largest leasing provider holding less than 20% of the market.


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Considering the industry affiliations of the five largest leasing companies, Figure 8 shows that banks dominate in all markets. Banks as leasing providers are also prevalent in the Czech Republic, the Slovak Republic and

Romania although these countries show a high number of independent leasing companies. In Poland, Latvia,

Lithuania, and Bulgaria, all five largest providers come from the banking industry, which is not surprising in

Poland, Latvia, and Lithuania given the high percentage of banks as leasing providers. The dominance of banks among the five largest providers in Bulgaria is interesting since they make up less than half of the existing companies. On the other hand, although the majority of leasing providers in Slovenia and Turkey are banks, they only account for three of the five largest companies.

Looking at the origin of the five largest leasing providers in Figure 9, we find that foreign companies clearly dominate. The only exception is Turkey, which is characterized by a high percentage of national leasing companies, where national companies also manage to hold a majority of the leasing market. Although the

Czech Republic, the Slovak Republic and Romania also show a high percentage of national leasing companies, the five biggest leasing providers are foreign institutions. The five largest providers in Poland, Estonia,

Lithuania, Bulgaria, and Croatia are foreign, which is not surprising given the high percentage of international companies involved in providing leasing services.

DISCUSSION

Although the European leasing market is still underdeveloped in comparison to the U.S., leasing volumes have shown high growth rates within Europe and the penetration of leasing is increasing steadily. The Central

Eastern European countries, albeit from a low base, have shown an average increase of 40% between 2004 and

2006, outpacing all other European regions. Leasing of road transport vehicles and cars are the main types of leasing in CEE and SEE, followed by leasing of machinery and industrial equipment.


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The analysis of the leasing providers in the 12 investigated countries shows that foreign banks clearly dominate the leasing markets in these countries. Although the Czech Republic, the Slovak Republic, Slovenia, and

Romania show a relatively high number of independent leasing companies, they do not account for the largest providers, banks also dominate in these markets. Concerning the origin of leasing companies, there is a high number of fully or mainly national companies in the Czech Republic, Romania, and especially Turkey, but

Turkey is the only country where domestic providers occupy a significant portion of the leasing market. As far as market concentration is concerned, the largest leasing provider holds a major part of the market in the Baltic countries, Slovenia, and Croatia. Market concentration is lowest in Poland and Romania.


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CONCLUSIONS

ISBN : 978-0-9742114-5-9

During the first phase of transition, weak creditor and property rights protection and a lack of effective legal institutions to enforce existing laws impeded effective credit allocation to private companies in transition countries. Newly restructured banks were unfamiliar with screening the creditworthiness of companies and therefore reluctant to grant loans to companies that could not provide sufficient collateral. This made access to finance a major issue for SMEs which often could not provide adequate track records and collateral as security and therefore had to consider alternative forms of financing. Leasing proved to resolve these problems.

Through the lessor’s retained ownership, a lessee is not required to provide additional collateral and insufficient bankruptcy rights can be circumvented as leasing entails the highest priority in bankruptcy. Leasing was thus seen to be a good substitute to credit taking, especially for SMEs, leading to higher financing rates and in turn an encouraged transition process. The financial market structure in CEE thus differs. Conventional discussions of financial industries in transition economies did not pay ample attention to this factor in economic development. Leasing is showing high growth rates in Europe, especially in Central Eastern European countries leasing rates are booming, thus supporting the suggestion that leasing is especially important in transition countries. Concerning the providers of leasing services, most companies in Central and South Eastern Europe are controlled by foreign banks. This leads to the assumption that many foreign banks recognized the potential of leasing in transition countries and the possibility to lend money to a much bigger clientele without the risks associated to bank loans. We conclude that leasing provides a viable alternative to bank loans, while bearing less risk than the latter and thus supports financial market development. Leasing as an alternative form of finance deserves more attention by market participants, supervisors and researchers.


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REFERENCES

ISBN : 978-0-9742114-5-9

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07/245.

Homepages of leasing and financial associations:

Association of Leasing Companies in Poland: www.leasing.org.pl

Association of Leasing Companies of Slovak Republic: www.lizing.sk

Croatian Financial Services Supervisory Agency: www.hanfa.hr

Czech Leasing and Finance Association: www.clfa.cz

Estonian Leasing Association: www.liisingliit.ee

Hungarian Leasing and Finance Association: www.lizingszovetseg.hu

Latvian Leasing and Factoring Association: ww.llda.lv

Leaseurope (European Federation of Leasing Company Associations): www.leaseurope.org

Lithuanian Leasing Association: www.lease.lt

Turkish Leasing Association: www.fider.org.tr


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TABLES

Table 1: New leasing volumes per cluster

ISBN : 978-0-9742114-5-9 m€

New Leasing Volumes

2004 2005

Growth

Mediterranean 21,151.45 25,860.53 22.3%

Nordic 13,379.14 17,475.17 30.6%

UK & Ireland 53,651.00 55,773.62 4.0%

Germany

Italy

France

44,410.00

38,039.96

26,915.00

49,270.00

44,160.00

28,776.00

10.9%

16.1%

6.9%

Benelux, AT &

CH

CEE

18,640.41

14,940.87

20,387.84

21,199.30

9.4%

41.9%

231,127.84 262,902.45 13.8%

Source: Leaseurope, 2005

Table 2: Market shares of the five largest leasing providers 1

Country

Czech Republic

Hungary

Poland

Slovak Republic

Slovenia

Estonia

Latvia

Lithuania

Bulgaria

Romania

Croatia

Turkey

Market shares of five biggest leasing providers

14.9% 11.2% 8.4% 7.2% 7.1%

Sum

48.9%

16.6% 9.1%

12.2% 10.4%

9.0%

9.9%

8.9%

6.1%

8.5%

5.6%

52.1%

44.2%

18.7% 17.5% 10.3% 10.2% 10.1% 66.8%

38.1% 9.9% 9.2% 6.1% 5.9% 69.2%

53.2% 28.1% 10.2% 7.8% 0.6% 99.9%

42.3% 23.2% 11.5%

39.3% 36.7% 6.6%

19.6% 12.6% 9.7%

6.9%

6.3%

7.6%

5.9%

2.9%

6.9%

89.8%

91.8%

56.4%

9.0% 8.4% 6.1% 6.1%

43.1% 12.7% 10.5% 10.0%

14.2% 11.0% 10.7% 7.1%

5.7% 35.4%

9.4% 85.8%

7.0% 50.0%

Sources: Czech Leasing and Finance Association; Hungarian Leasing and Finance Association;

Association of Leasing Companies in Poland; Association of Leasing Companies of Slovak Republic;

Jakin, 2005: 29; Estonian Leasing Association; Latvian Leasing and Factoring Association;

Lithuanian Leasing Association; Kroatische Wirtschaftskammer, 2006; ICEX, 2006: 63;

DailyBusiness.ro; Turkish Leasing Association


Florence, Italy

18


FIGURES

Figure 1: Institutional quality index as of 2006

ISBN : 978-0-9742114-5-9

Source: Zoli, 2007

Figure 2: Borrowers and lenders legal rights index as of 2006

Source: Zoli, 2007


Florence, Italy

19


Figure 3: New leasing growth rates per cluster

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

M editerranean

Nordic

UK&Ireland

-2.5%

Germany

Italy

France

Benelux, AT&CH

CEE

-5%

13.6%

3.6%

4.0%

10.9%

2.6%

8.9%

6.9%

4.3%

9.4%

6.9%

16.1%

22.3%

30.6%

5% 15% 25%

2005/2006 2004/2005

35%

41.9%

38.6%

45%

Sources: Leaseurope, 2005; Leaseurope, 2006

Figure 4: New leasing volumes in m€ as of 2006

ISBN : 978-0-9742114-5-9

Equipment Real estate

Source: Leaseurope


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20


Figure 5: Equipment leases by type of asset as of 2006 (Turkey as of 2003)

978-0-9742114-5-9

50%

40%

30%

20%

10%

0%

100%

90%

80%

70%

60%

40

30

20

70

60

50

10

0

Machinery and industrial equipment

Road transport vehicles

Ships, aircraft, railway, rolling stock

Source: Leaseurope

Computers and business machines

Motorcars

Others

Figure 6: Leasing companies by profile as of 2006 (Turkey as of 2003) leasing companies with banking status or banks leasing companies owned by banks captive leasing companies independent leasing companies

Source: Leaseurope; Latvian Leasing and Factoring Association; Lithuanian Leasing Association


Florence, Italy

21

50

40

30

20

10

70

60

0


Figure 7: Leasing companies by origin as of 2006 (Turkey as of 2003)

978-0-9742114-5-9 fully or mainly national companies local branches of international companies joint ventures with international companies

Sources: Croatian Financial Services Supervisory Agency; Leaseurope; Latvian Leasing and Factoring

Association; Lithuanian Leasing Association

Figure 8: Industry affiliations of five largest leasing providers


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22

1

0

3

2


5

4

ISBN : 978-0-9742114-5-9 banking industry independent leasing companies

Sources: Company homepages

Figure 9: Origin of five largest leasing providers captive leasing companies

1

0

3

2

5

4

Sources: Company homepages

End Notes


Florence, Italy foreign domestic

23


1

Data for the overviews of the five largest leasing providers are for the Czech Republic, Poland, the Slovak

Republic, Latvia, Bulgaria, and Romania by volume of new leases in 2006, for Hungary by volume of new leases in the first three quarters of 2007, for Slovenia by business volume in 2003, for Estonia and Croatia by volume of new leases in 2005, for Lithuania by share of leasing portfolio in 2006, and for Turkey by volume of new leases in 2004.


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Market Structure As Determinant: The Case Of Leasing In Banking Industry Transformation In Central And South Eastern Europe

Market Structure as Determinant: the Case of Leasing in

Banking Industry Transformation in Central and South

Eastern Europe

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Market Structure As Determinant: The Case Of Leasing In Banking Industry Transformation In Central And South Eastern Europe

Market Structure as Determinant: the Case of Leasing in

Banking Industry Transformation in Central and South

Eastern Europe

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