The Study Of The Financial Risk Of Real Estate Banking Finance

Along with the fast development of real estate market in China since 1998, the real estate industry does a lot to develop the economy and to improve people's living standard. As real estate industry is a capital-intense industry, the banking sector's support is very important to its development. The expansion of the real estate sector in recent years has owed a lot to the bank financing. In this process, the risk concentration in banking sector again becomes a hot issue thus the study of it is necessary and important.After analyzing the definition and the property of real estate, the author reaches, the conclusion that as the real estate market is a monopolistic competitive market, not only the national market but also the regional market should be explored and governmental interference is needed to mitigate the social welfare loss. Then the author reviews the institutional evolution and the important role of real estate financing which offers an institutional background for the study. The meaning of the study of the real-estate risk concentration in banking sector lies in that the bank-financed real estate industry is often the hotbed of speculation. While this phenomenon originates from the price mechanism of real estate, the paper gives a detailed analysis to it. And since the banking finance is an indispensable factor for the shaping of real estate bubble, besides traditional financial index, the author uses the real estate bubble as an industrial index to appraise the real estate financial risk. The following part focuses on how the accumulative risk concentration in banking sector which help the real estate bubble develop eventually lead to financial crisis. The third part studies the real estate bubble in China with three indexes: the investment speed, the price-rising speed and the vacancy number, and reaches the conclusion that there exist expansive real estate bubble in China's regional markets which are mainly Beijing, Shanghai and Guangzhou and its neighboring area. Then the author explores the risk in banking sector with four financial indexes: default risk, liquidity risk, interest rate risk and the un-performing real estate loan. The last part focuses on the causes of the real estate financial risk in banking sector and the suggestions to resolve it.