User Specialization and Asset Financing

London Business School Institute of Finance and Accounting Working Paper 196

Posted: 7 May 1998

See all articles by Michel A. Habib

Michel A. Habib

University of Zurich; Swiss Finance Institute

D. Bruce Johnsen

Independent

Abstract

This paper provides a common explanation for a variety of asset financing arrangements that are observed in practice, specifically leasing, secured debt, project finance without recourse, and vendor financing. Such arrangements are viewed as serving to allocate ownership of one or many assets to those users best able to make use of these assets, in a manner that precludes ex-post bargaining and therefore avoids the distortion of ex-ante investment. The paper also provides a partial explanation for the various levels of seniority of debt.

JEL Classification: G12

Suggested Citation

Habib, Michel A. and Johnsen, D. Bruce, User Specialization and Asset Financing. London Business School Institute of Finance and Accounting Working Paper 196, Available at SSRN: https://ssrn.com/abstract=6329

Michel A. Habib (Contact Author)

University of Zurich ( email )

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Zurich, 8032
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HOME PAGE: http://www.isb.uzh.ch/institut/profs/mhabib.htm

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

D. Bruce Johnsen

Independent

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