With over $116 billion of financing in place with Canadian businesses and consumers, the asset-based financing industry is the largest provider of debt financing in this country after the traditional lenders (banks and credit unions).
According to a recent Annual Survey of Asset-Based Financing and Leasing in Canada, the asset-based financing industry’s portfolio of assets (owned and managed) was estimated to be worth $116.7 billion. The value of assets under management by equipment finance companies is estimated to be $67 billion. The value of the consumer vehicle leasing portfolio is estimated to be $39.7 billion with an additional $9.9 billion in commercial vehicle leasing.
Investment drives productivity – economic research states that machinery and equipment investment directly contributes to labour productivity gains by increasing the amount of productive capital available for workers to use. Research also suggests that machinery and equipment investment is either directly the agent of technological change, or else an important facilitator in the diffusion of new technology.
Productivity raises living standards – in order to boost living standards either labour productivity needs to rise, or people need to work harder, or more people need to become employed, or more people of working age need to enter society relative to total population. Canadian living standard gains rely primarily on labour productivity growth.
Financial system development promotes investment – research conducted by the OECD1 supports the notion that financial system development promotes capital spending and that countries with weaker financial systems are unable to effectively channel domestic or global savings towards new investment opportunities.
Asset-based financing adds significantly to the financial system – the analysis in this report finds that asset-based financing was responsible for a 2.3% increase in Canada’s living standards over the decade 1992 to 2002 (or about 8% of the total increase in Canada’s living standards over that decade). Asset-based financing makes a significant positive contribution to increasing national living standards.