Real Estate Finance In The Context Of China's Excess Liquidity Risk Research

In 2007 the subprime mortgage crisis broke out in the United States. In this crisis, the real estate bubble burst, and the housing price fell dramatically. A large number of financial institutions have fallen in trouble; some of them have been bankrupt. Many funds and investment banks who heavily invested in the subprime mortgage backed securities have suffered a great loss. This crisis triggered a big turmoil in the US financial market, as well as the global market. It also shows the huge risks which underlie the excessive expansion of real estates.In recent years, the imbalance of economic structure and the excessive growth of foreign trade surplus in china have led to the excessive growth in money supply and the excess liquidity in financial sector. Under the circumstance of excess liquidity, the prices of assets which are represented by real estate have soared significantly. Along with the rapid increase in the real estate market, the financial risks of real estate have become an important issue which should be paid more attention to. Therefore, this paper focuses on the rapid increases in real estate prices and the financial risks led by the rapid price increasing. This paper also explores the relationship between the excess liquidity and the house price rising, as well as the financial risks which are caused by these factors. On the basis of research, the paper provides suggestions to promote the healthy development of real estate finance according to China's real situation.This paper is composed of five chapters, and the structure of the paper is as follow. Chapter one is the introduction, which introduces the background of this paper and the outcomes of the related researches. Chapter two uses the latest statistics to explain the circumstance of the excess liquidity and analyzes the factors causing the excess liquidity. Chapter three discusses the influence of excess liquidity on real estate finance theoretically and takes the US and Japan's real estate bubble as examples to further describe the influences. Chapter four mainly focuses on the latest developments of real estate market and finance and analyzes the financial risks under the circumstance of excess liquidity. Based on the researches above, chapter five gives the detail suggestions, which refer to reclaiming the excess liquidity, standardizing the real estate market order and improving the financial system of real estate, to guard against and defuse financial risks of real estate as well as to make the real estate finance develop healthily.