A Research On The Relationship Between Bank Loans And Real Estate Price

After30years of reform and opening up, China’s real estate market has seen rapid development. The prosperity of China’s real estate market is inseparable from the support of banks and other financial institutions, and the funds of bank loans have important effects on both the suppliers and purchasers of the real estate market. Bank loans provide effective financial support to the real estate industry, but it will also directly affect the real estate price. Therefore, the paper carries out a detailed research on how to utilize bank’s role in financing and keep the real estate prices in a reasonable range by adjusting the loan policies.The paper is divided into six parts. The first chapter is an introduction to this paper, including a brief description of the recent changes of China’s bank loans and real estate prices and a review of the literatures. The second chapter analyzes the values of real estate and the factors that influence the real estate prices, and then specifically describes the development and current situation of China’s real estate industry. The third chapter introduces the policies and changes of the bank loans from the perspectives of general bank loans and real estate-related bank loans. The fourth chapter is the theoretical analysis between bank loans and real estate prices, using quantity theory of money and the IS-LM model to analyze the effects of quantity and price of bank loans on real estate prices. The fifth chapter uses monthly data of China’s real estate sales price index, the YOY growth rate of loan balances of financial institutions, and medium-and-long-term lending rates to conduct an empirical test, and concludes and illustrates the test result. The sixth chapter provides some reasonable suggestions on how to stabilize real estate prices in China based on the above empirical resultsThe paper selects certain economic data from October1997to December2011, and conducts an empirical test on the relationship between China’s bank loans and real estate prices, the main conclusions are as follows:China’s real estate industry has experienced rapid growth, with the real estate prices showing an overall rising trend, but there still exist many problems. According to the quantity theory of money, the increase in the number of bank loans will lead to the rise of real estate prices; according to the IS-LM model, the decline in bank lending rates will also drive the real estate prices. The empirical results show a positive correlation between the number of bank loans and real estate prices, but also show a positive correlation between bank lending rates and real estate prices, which may be related to China’s specific conditions. The Granger causality test results are not significant, indicating that no good interactive mechanism has been established between bank loans and real estate prices, that other factors still have a significant impact on real estate prices. The VAR model shows that in the short run the relationship between the bank loans and real estate prices is very significant, indicating the existence of a direct and rapid transmission mechanism between bank loans and real estate prices. Excluding the real estate price itself, the most important factor for real estate prices is the number of bank loans, followed by the interest rate of bank loans.In the paper, there are some innovative points. In terms of data, there are171groups of sample data, making the empirical results more accurate and effective. The paper summarizes the changes of the quantity and price of bank loans in terms of policy, and uses the quantity theory of money and the IS-LM model to analyze the effects of the quantity and price of bank loans on real estate prices from the theoretical aspects. The empirical test analyzes the relationship between bank credit and real estate prices from both short term and long term. Due to my limited capacity, there certainly are a lot of inadequacies. For instance, the empirical model is relatively simple, and some of the results are not very significant, which are to be improved further in future research.