Evaluation On China’s Real Estate Industries Credit Risk

The commercial banks in terms of capital support the survival and development of real estate.Thus the real estate has the characteristics of the high debt.and it is the high risk industries, which credit risk is one of the important financial risk and the main target and the core content of the risk management of financial institutions and regulatory authorities. Last century. Japan’s economic bubble burst. the economic crisis in Southeast Asia are related to credit risk of real estate.With the continued growth of the national economy.China’s real estate industry developed rapidly and provided for financial institutions to expand the real estate business since1978.but credit risk of real estate is gradually exposed. Credit risk affects all aspects of life in modern society, the country’s macroeconomic policy formulation and industrial economic development, and the stability and coordinated development of the global economy. Besides.China’s real estate credit is low at present.which credit risk management levels were significantly lower than the foreign, so it is a great significance to research credit risk of China’s real estate.Based on this.this paper uses qualitative and quantitative approach together to make theoretical analysis on real estate credit risk.to build a measurement model and thus make an empirical study. Specifically including, the real estate listed companies utilize the KMV model to measure default risk based on the theory of credit risk, thus it provides an IRB for China’s commercial banks which measure credit risk of the real estate industries.This article introduced followed by the related theory of real estate credit risk.the formation mechanism of credit risk and the problems of China real estate.causes, influencing factors and so on. and then pointed out the problem to be solved in this paper—the credit risk measurement and management of real estate industry. Comparison of the more commonly used credit risk measurement models:the KMV model. Credit Risk+model, the Credit Metrics model. CPV model, and pointed out that the KMV model is more suitable than others to measure the credit risk of the real estate industry in China and introduced it in detail.This article selects some representative real estate listed companies, uses the KMV model to measure its risk, inculcates a large number of disclose data and conducts an empirical study of China’s actual situation. The result shows that distance to default of blue chip companies are significantly higher than of underperformance class companies, the expected default frequency of blue chip companies are significantly lower than of underperformance class companies. It also validates the adaptability of the KMV model that measures credit risk of China’s real estate and provides the accurate and scientific measure reference in China’s real estate, we can be find the problems.analyze the results.come to the conclusion based on the specific situation in our country and put forward some policy recommendations.which the model results does not match with the actual situation. It can make up the lack of credit risk management.and it is a strong theoretical and practical significance to measure the credit risk of the real estate,promotes stable and healthy development of China real estate and maintains financial order and the economic behavior.