Debt displacement

Debt displacement

The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in their debt capacity.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Debt Displacement

The reduction in a company's ability to borrow because it leases its assets. While debt displacement occurs when a company receives income from its leases, it prevents the company from using those assets as collateral for a loan. Debt displacement can be detrimental, depending on the nature of the business and how much income the leases bring.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
The results of empirical examination of the debt displacement effects of leasing tend to contradict the theoretical prediction.
The significance of tax as a determinant of leasing: evidence from UK tax changes
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