CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Leasing is a contract existing between the lessee and the lessor in which the lessor offers equipment or property to the lessee for rent at an agreed installment payment over a given period of time. The lessor retains ownership while the lessee enjoys the benefit of using the equipment or property over the period. Leasing is specially contracted for the use of land and equipment and it is as old as modern civilization. The responsibility of maintaining the leased asset lies with the lessor Leasing Properties provides the access to assets required for productive ventures, and to boost economic growth and development –Olusoga (2004).
It is suitable for the financing of fixed assets while equity is suitable for financing the use of permanent Asset for permanent operation without any threat of management/ownership, take over or dilution as well as the maintenance right balance in capital gearing structure-Owoeye (2004). Also leasing provided ease of exit when the period of the contract is due .The per capital income in Nigeria is low therefore it is difficult for entrepreneurs to accumulate fund for capital investment. This situation encourages the adoption of equipment leasing as alternative.
Competitive Market: The lease market is more competitive and customer driven especially now that the lease business is being appreciated as a lucrative business. This is because of the combination of more knowledgeable and aggressive lessees with inexpensive analytical tools. Impersonal Lease Services: The growth in technology and equipment system has greatly impacted on the business to grow into larger scale organizations running leasing services.
Changes in Lease Products: Most lease industries globally are not regulated. This spurs up market competition and quick adoption to evolving lease product mix in response to vagaries in environmental policies, Emergency of International Markets: Trade liberalization and increase in lease awareness and sophistication. Therefore the research seeks to investigate leasing as a source of fund for corporate entities (a case study of 7up bottling company plc).