earticle

영어

The objective: The property industry of China has always played an important role in the economy and has been a key driver of growth. But the persistent increase in housing prices, particularly in China’s major cities after 2008, challenge both social stability and the sustainability of the property market. International experience suggests that bank lending has often led to financial fragility and swings in property prices. There are four sides that push real estate price growth. Firstly, for the real estate development companies, the real estate investment rate of return would increase if real estate price rise, sales quantities grow, and cause an increase in real estate loans. Secondly, for the property buyers, real estate prices and sales quantity will stimulate the real estate demand, especially investment and speculative demand for real estate. This real estate demand growth will indirectly cause an increase in real estate loans. Thirdly, for the banks, if real estate prices rise, this will help the real estate loan quality and yields increase, and improve the real estate mortgage value, thereby enhancing the motivation and ability of banks to increase real estate loans. Fourthly, the local government will encourage banks to increase real estate loans for bringing in more land income and tax revenue though the real estate price rise. But property buyers cannot buy if the housing prices rise and sales quantity decrease rapidly and exceed the capacity of the residents. Monetary policy cannot be used to guard against excessive asset price fluctuations under the Linked Exchange Rate system. Prudential regulation and effective risk controls by banks have limited the exposure and vulnerability of the banking sector to property price swings. In this study we develop a reduced-form theoretical model which suggests bank lending is closely related to property prices and sales quantity, and that property can develop cycles given plausible assumptions, where the cycles are largely driven by the dynamic linkage between the banking sector and property sector. In addition, Non-Performance Loan ratio, income, interest margin, tax, and urbanization has an important influence to property industry. We analyze the determinants of the bank sector to the property prices and sales quantity in 31 provinces since 2000 to 2014 based on a fixed and random model of panel data.