Study Of Real Estate Debt Financing Risks

Along with the fast development of the 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 the 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.The paper analyzes the development status of the real estate industry, how the land agent to finance and how the capital to work. Then conclude that the credit scale, especially the mortgage scale become bigger, what result in the real estate become hotter. The capital owned by the real estate agent is not enough, what make the commercial bank have to endure the market risk and the credit risk.Then the paper analyzes the reason of the risk during the financing for the real estate, and how the risk conducts. First, the paper analyzes the weakness in the financial system and agency of the real estate, the limited rationality of the financial subject of the real estate. Second, taking the special background in China into consideration, the paper discusses the reason of the financing risk of the real estate deeply: (1) the enterprise, bank and government always pursuit the maximum profit, what result in the credit problems and then the credit problems induce the financing risk. (2) The rent seeking in the lank market and the finance market distort the resource collocation. (3) The soft budget of the bank- land agent and the government-bank results the debt financing of the real estate transfer and accumulate.Finally, basing on the above the conclusion, the paper comes up withsome measures to remove the risk from the perspective of the institution and the innovation: (1) reform the land market, the finance and the revenue system and the financing system of the real estate; (2) import the evaluation system, optimize the credit capital; manage the credit capital and control the risk to the lowest level; (3) accelerate the renovation in the land agent, the finance system of the real estate, finance market of the real estate and thefinancial instruments.