Why do banks provide leasing?I

Banks are engaging in leasing activities at an increasing rate which is shown by aggregated data for European as well as for US banking companies. However, little is known about leasing activities at the bank level. The contribution of this paper is to introduce the nexus of leasing in banking. Starting from an institutional base, it shows key features of banks ’ leasing activities using the example of regional German banks. The banks in this sample can choose between different types of leasing contracts which provide them with certain leeway in conducting business with their clients. This should improve banks ’ income and optimize their risk-return profile. Using a unique dataset we find a robust and significant positive impact from banks ’ leasing volumes on their profitability, however, this effect cannot be observed for its competitiveness. Key words