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Lease Financing of Bangladesh: A Descriptive Analysis

Received: 10 December 2013     Published: 10 January 2014
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Abstract

Leasing industry is one of the flourishing sector of Bangladesh. The leasing companies on the average are doing pretty well since inception in this country. Leasing has gained its popularity for several reasons. The first and most important of all is that leasing can be thought of as an alternative source of fund which is most of the cases cheaper, and for the companies which don’t have a high credit rating or a visible positive past track record, this may be the main source of financing. Another thing is, lease is an alternative to investment. If you need a particular asset for running or expanding your business, you may choose to lease it rather than purchase it. And you can cancel the lease options in the face of changing macroeconomic factors, such as obsolescence, new technologies, changing business needs or market conditions etc. Lease is nowadays treated by the developed markets as a provider of 100% financing and they have a notion that lease displaces debt. Leasing actually reduces the leverage needs of a firm. We can understand that the leasing market is still very small in Bangladesh and the actual potential market is highly untapped. Since people are not well aware of different types of lease products, they look for other alternative before leasing. But now it’s time for us to break away from tradition and utilize leasing in our businesses fully so that we can realize its benefits. We believe that leasing sector in Bangladesh will grow, as people become more knowledgeable and more willing to look for alternative sources of financing.

Published in International Journal of Economics, Finance and Management Sciences (Volume 2, Issue 1)
DOI 10.11648/j.ijefm.20140201.15
Page(s) 33-42
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2014. Published by Science Publishing Group

Keywords

Leasing, Industry, Leverage, Bank, Financial Institution, Finance

References
[1] Altman, Edward Handbook of Corporate Finance, John Wily and Sons, New York, 1986 pp11-41.
[2] Choudhury, A. Quadir, "Leasing in Bangladesh- An Overview", The Bangladesh Observer, 1999, December 03, Dhaka.
[3] Anderson, Paul, F. and Martin J. D. "Lease vs. Purchase Decision: A Survey of Current Practices", Financial Management, Vol.6, Spring, pp.1979, 41-47.
[4] Choudhury, T. A. "An evaluation of the performance of commercial banks in Bangladesh", Ph.D. thesis. 1990.
[5] Clark, T. M. Leasing, McGraw Hill, London, 1976.
[6] Cooper, R. A. and A. J. Weeks, Data Models and Statistical Analysis, Haritage Publish, New Delhi, India, 1983, P-400.
[7] Fabozzi, Frank J. Equipment Leasing –A Comprehensive Guide for Executives, Dow Jones – Irwin Inc., USA, 1981, P-248.
Cite This Article
  • APA Style

    Md. Ariful Islam, Md. Rayhan Islam, Mahmudul Hasan Siddiqui. (2014). Lease Financing of Bangladesh: A Descriptive Analysis. International Journal of Economics, Finance and Management Sciences, 2(1), 33-42. https://doi.org/10.11648/j.ijefm.20140201.15

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    ACS Style

    Md. Ariful Islam; Md. Rayhan Islam; Mahmudul Hasan Siddiqui. Lease Financing of Bangladesh: A Descriptive Analysis. Int. J. Econ. Finance Manag. Sci. 2014, 2(1), 33-42. doi: 10.11648/j.ijefm.20140201.15

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    AMA Style

    Md. Ariful Islam, Md. Rayhan Islam, Mahmudul Hasan Siddiqui. Lease Financing of Bangladesh: A Descriptive Analysis. Int J Econ Finance Manag Sci. 2014;2(1):33-42. doi: 10.11648/j.ijefm.20140201.15

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  • @article{10.11648/j.ijefm.20140201.15,
      author = {Md. Ariful Islam and Md. Rayhan Islam and Mahmudul Hasan Siddiqui},
      title = {Lease Financing of Bangladesh: A Descriptive Analysis},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {2},
      number = {1},
      pages = {33-42},
      doi = {10.11648/j.ijefm.20140201.15},
      url = {https://doi.org/10.11648/j.ijefm.20140201.15},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20140201.15},
      abstract = {Leasing industry is one of the flourishing sector of Bangladesh. The leasing companies on the average are doing pretty well since inception in this country. Leasing has gained its popularity for several reasons. The first and most important of all is that leasing can be thought of as an alternative source of fund which is most of the cases cheaper, and for the companies which don’t have a high credit rating or a visible positive past track record, this may be the main source of financing. Another thing is, lease is an alternative to investment. If you need a particular asset for running or expanding your business, you may choose to lease it rather than purchase it. And you can cancel the lease options in the face of changing macroeconomic factors, such as obsolescence, new technologies, changing business needs or market conditions etc. Lease is nowadays treated by the developed markets as a provider of 100% financing and they have a notion that lease displaces debt. Leasing actually reduces the leverage needs of a firm. We can understand that the leasing market is still very small in Bangladesh and the actual potential market is highly untapped. Since people are not well aware of different types of lease products, they look for other alternative before leasing. But now it’s time for us to break away from tradition and utilize leasing in our businesses fully so that we can realize its benefits. We believe that leasing sector in Bangladesh will grow, as people become more knowledgeable and more willing to look for alternative sources of financing.},
     year = {2014}
    }
    

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  • TY  - JOUR
    T1  - Lease Financing of Bangladesh: A Descriptive Analysis
    AU  - Md. Ariful Islam
    AU  - Md. Rayhan Islam
    AU  - Mahmudul Hasan Siddiqui
    Y1  - 2014/01/10
    PY  - 2014
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    DO  - 10.11648/j.ijefm.20140201.15
    T2  - International Journal of Economics, Finance and Management Sciences
    JF  - International Journal of Economics, Finance and Management Sciences
    JO  - International Journal of Economics, Finance and Management Sciences
    SP  - 33
    EP  - 42
    PB  - Science Publishing Group
    SN  - 2326-9561
    UR  - https://doi.org/10.11648/j.ijefm.20140201.15
    AB  - Leasing industry is one of the flourishing sector of Bangladesh. The leasing companies on the average are doing pretty well since inception in this country. Leasing has gained its popularity for several reasons. The first and most important of all is that leasing can be thought of as an alternative source of fund which is most of the cases cheaper, and for the companies which don’t have a high credit rating or a visible positive past track record, this may be the main source of financing. Another thing is, lease is an alternative to investment. If you need a particular asset for running or expanding your business, you may choose to lease it rather than purchase it. And you can cancel the lease options in the face of changing macroeconomic factors, such as obsolescence, new technologies, changing business needs or market conditions etc. Lease is nowadays treated by the developed markets as a provider of 100% financing and they have a notion that lease displaces debt. Leasing actually reduces the leverage needs of a firm. We can understand that the leasing market is still very small in Bangladesh and the actual potential market is highly untapped. Since people are not well aware of different types of lease products, they look for other alternative before leasing. But now it’s time for us to break away from tradition and utilize leasing in our businesses fully so that we can realize its benefits. We believe that leasing sector in Bangladesh will grow, as people become more knowledgeable and more willing to look for alternative sources of financing.
    VL  - 2
    IS  - 1
    ER  - 

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Author Information
  • BASIC Bank Limited, Khulna, Bangladesh

  • Business Administration Discipline, Khulna University, Khulna-9208, Bangladesh

  • Unilever Bangladesh Limited, Gulshan-1, Dhaka-1212, Bangladesh

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