A Study On Theoretical And Bussiness Innovation Of Finance Leasing

Finance lease has obtained 13 % average annual growth speed in worldwide since it came into being in America in 1950s. As a new financing mean, investment way, trade mode and a special credit form, combined finance funds with assets, Finance lease has developed as the bridge connecting finance, trade and industrial production.Compared to most of developed countries, the development of finance lease in China has lagged far behind. A lot of reasons caused the situation. The cognitive deviation of its functional orientation and the industry belonging, and the lack of business innovation are undoubtedly the important and key reasons. These are also the core of this paper. The paper starts with "four pillars of doctrine" and "leasing development cycle theory" , makes a systematic and thorough study on finance lease including definition, industry belonging, operation institutions , business innovation and ect , in accordance with the basic thinking of the theoretical innovation - the institutional innovation - the theoretical innovation.The definition and standards of finance lease in China was confused, which causes the difficulty to the development of finance lease. Use for reference from the definition of the international conventions and the United Statesa, based on detailed analysis of the basic elements of lease financing on the view in favor of development of lease financing, the paper gives a new definition of lease financing that lease financing is a lease participated by three parties, the tenant choosing leased items and the seller, the lessor purchasing with capital and leasing the tenant to use. This paper deeply analysis the difference between the lease financing and its similar industry with the comparative analysis, and achieves a new point that the lease financing can become an individual business.As the carrier of the finance leasing business, qualification and characters confirm of the main operation body is important. The controversy whether lease business is only the financial institutions or not and the problems of the barrier to entry and strict or loose regulatory caused by the controversy, is critical for the development of finance lease. Under Legal Framework, an institution innovation perspective is proposed that financial institutions operate indirectly and developt the Leasing of Manufacturers through investigating the correlation between development of leasing and leasing companies and the actual situations abroad.Theoretical innovation and institutional innovation provide analysis foundation for business innovation of finance leasing. From the existing innovations theories and practices on finance leasing, the present business innovation lacks of a system, structured theoretical guide and practical conclusion. Business innovation, in a fragmented state, does not form a joint force, not find a good breakthrough. From the economics viewpoint, the essence of innovation is an adjustment process between risks and benefits. Therefore, financing lease innovation has just two levels. One is financial leasing transaction's internal innovation -- the parties adjust internal risks and benefits; another is financial leasing transaction's external innovation -- financial leasing combines external environment to transfer risks and benefits in larger range. After structuring the basic framework of the business innovation of financing lease, the internal innovative model and the external innovative model respectively is discussed. In the internal innovative model, the adjustment of the lease terms in the main contract is a major aspect for innovation, the parties may widely negotiate about the following: the type of lease, lease object and the seller choose, lease period, pay rent, maintenance of lease object, ending an agreement in lease period and dealing with the lease object at expiry of the lease, etc. Therefore, it exist a tremendous room for innovation and risk lease and project finance lease deserve our special attention. On the external innovation model, it refers to the cooperation and combination between transactions participators, bank, other non-bank financial institutions and the social environment. Through cooperation, it integrates the advantages of all kinds of financial institutions and finance lease transactions. It makes various finance lease transactions to satisfy the social needs. Lease funds, lease factoring and lease debt securitization deserve our special attention.The traditional lease decision and pricing cannot reflect the uncertainty, strategic flexibility and the investment irreversibility in the lease innovation. It needs corresponding innovation. The paper makes use of real options theory and methods, explores abandonment options' application in the innovation business decisions and pricing, and offers technical support for business innovation.Although the analysis on the financing lease of theoretical innovation, institutional innovation and bussiness innovations is not perfect, theoretically and practically, it is undoubtedly helpful to China's finance leasing industry out of its present difficulties and to achieving sustainable development.