off-balance-sheet finance

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The use of leased rather than owned buildings and equipment. This reduces the capital required to run a business, and reduces the risk of loss due to technical obsolescence of the equipment. Because the owner of leased equipment bears this risk, the rental on off-balance-sheet items may exceed the interest and amortization costs of owning them, so that use of off-balance-sheet finance lowers current profits.

Subjects: Financial Institutions and Services.

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