Speaker: ZHANG Jinfan, the School of Management and Economics (SME) of The Chinese University of Hong Kong, Shenzhen, Associate Professor

Date & Time:12:00-13:00, Tue. 20th, April 2021

Venue: Room 306, Tongji Building A

Abstract:

By analyzing a hand-collected transaction-level dataset on the finance leases of China’s public firms for the period 2007-2019, this paper sheds light on China’s leasing market, the second largest in the world. We find that banks use their affiliated leasing firms to provide credit to constrained clients in order to circumvent the government’s targeted monetary tightening policy. Finance Lease offsets the expected decline in traditional bank loans in policy-targeted industries, and therefore hampers the effectiveness of the monetary policy. Although the regulatory arbitrage may accumulate systemic risk at the macro level, bank-affiliated leasing firms charge lower leasing rate and exert tighter risk control than non-bank-affiliated leasing firms at the micro level. These findings indicate that banks use finance leases as a channel to keep low-risk clients rather than to hide risk and make excessive profit.