Efficiency Analysis of Leasing Companies in Pakistan

Abstract

In Pakistan’s economic development Leasing sector also contribute. It provides heavy machinery and equipment to the small enterprises which are facing financial difficulties in running the business. Leasing companies provide assets and equipment on lease. In other countries mostly, commercial banks provide the leasing services. As for as the study on leasing sector’s efficiency is concerned, a very few studies are conducted on that topic and a limited literature available on that topic. This study aims to measure the CE and PE of Pakistan’s leasing sector from 2010 to 2019 by taking the unbalanced panel data of 9 leasing companies registered at PSX through the application of parametric method SFA in the first step of analysis. The Input and output variables were selected from the existing literature. This study uses 2 outputs such as Income and Investment while 3 Inputs such as Operating Expenses, Equity, and Liability. In the second step of analysis, it is investigated that how CE and PE scores are affected through the variables also called determinants such as Size, Investment, ROA, Liquidity, and Equity. The leasing sector’s findings revealed that only ROA has substantial impact on TEP while Size, Investment, ROA has substantial impact on TEC.