The Research On The Relationship Between The Real Estate Cycle And The Financial Stability

China's real estate industry and financial industry have made a great development in recent years, along with the reforms of China's housing system and financial system. These two industries are taking more and more important role in our economics and their relationship is growing closer. The development of property industry is becoming the new profit resource of financial industry, at the same time, its effects on financial stability is enhancing own to the property industry assembling more and more funds. The development of real estate industry needs financial supports, and financial stability is the assurance of its development, meanwhile, the financial stability policy plays an active role to smooth the real estate cycle fluctuation. Using the financial policies to smooth the real estate cycle is not only advantageous to the steady development of real estate industry, but also advantageous to reduce the potential risk of financial system, which can promote the health development of the two industries continuously. Owe to the great significance, this thesis makes a thorough research of the relationship between the real estate cycle and finance stability.The paper includes six sections. The sectionⅠis a literature review of the real estate cycle, financial stability and their relationship. The sectionⅡdefines the real estate cycle and financial stability, and then analyses their relationship, which is the theory foundation of our research. The sectionⅢdescribes the situation of the real estate cycle and financial stability in China, and presents the current situation of their relationship, which is the evidence of our research. The sectionⅣsupply VAR model analysis and Granger examination on the effects of China real estate cycle to financial stability. The sectionⅤanalyses the effects of financial stability policies to real estate cycle by VAR model analysis Granger examination also. And the last section suggests how to use the financial policies to smooth the real estate cycle based on the above research.This paper's construction is distinct. Firstly, it summarizes relative literatures. Secondly, it makes theory analysis, empirical analysis and positive analysis. Finally, it put forwards suggestion on the base of above analysis.