UEH Sustainable Finance Institute of CELG organized a seminar: "Extreme Weather and Corporate Fixed Asset Policies: Leasing as Alternative Finance"

18 Jul, 2024

On the morning of July 15, 2024, the UEH Sustainable Finance Institute (SFI) organized a seminar to discuss how weather-affected firms make decisions regarding fixed asset purchases and financing options. Dr. Kiet Duong, a Lecturer at the University of York's School for Business and Society, along with his co-author, presented their research findings.

Overview of Seminar

Attending the program, there were Dr. Tran Thi Tuan Anh - Vice Rector of UEH College of Economics, Law and Government; Assoc. Prof. Bui Thi Mai Hoai - Director of the Sustainable Finance Institute; Dr. Pham Thai Binh - Deputy Director of the Sustainable Finance Institute; Dr. Huynh Luu Duc Toan - Deputy Editor-in-Chief of JABES – UEH and also co-author of this research paper with Dr. Duong Tuan Kiet; with many researchers, lectures, students from Sustainable Finance Institute in particular and UEH in general.

The study analyzed data from over 26,000 firms across 40 countries, revealing that weather-affected firms are more likely to invest in fixed assets like machinery, equipment, and real estate. These investments are primarily funded through equity, bank loans, and government grants. Leasing was identified as a critical fallback financing option for firms facing barriers such as complex loan procedures, high collateral requirements, and increased loan rejection rates. Furthermore, the study found that firms often use a mix of leasing and other financing sources, demonstrating a flexible approach to asset acquisition.

Dr. Duong Tuan Kiet presented the research paper

There were several key takeaways:

Increased Fixed Asset Investments: Weather-affected firms tend to increase investments in machinery, equipment, and real estate.

Primary Financing Sources: Equity, bank loans, and government grants are the main sources of financing.

Leasing as Fallback: Leasing serves as a critical alternative for firms encountering external financing challenges.

Flexible Strategies: Firms often use a mix of leasing and other financing methods to acquire fixed assets.

Assoc. Prof. Mai Hoai, Director of the SFI, highlighted several key takeaways

The seminar featured significant contributions and professional insights from lecturers/researchers, lively enriching the discussion session with their expertise:

The importance of insurance contracts in mitigating the financial risks associated with weather-induced losses, emphasizing their role in providing financial stability for firms.

The sensitivity analysis of the study, taking detailed notes on how outliers affect the outcomes, thus ensuring the reliability of the findings.

The impact of tax policy on financing decisions, discussing how tax incentives and regulations can influence firms' choices in investing in fixed assets and their overall financial strategies.

Seminar’s discussion and Q&A session

The seminar successfully explored the financial decision-making processes of weather-affected firms, with active participation and valuable contributions from the attendees. More interestingly, Assoc. Prof. Mai Hoai stated that the attention of many master’s students in the seminar was particularly beneficial as they learned how to develop an empirical research by critically examining the literature with same topic, choosing and building an analytical framework.