The Study Of Housing Price Volatility And Bank Stability

By constructing a model of equilibrium between the real estate market and the credit market, the author use mathematic analysis to derivate the relationship between the bank credit and real-estate prices, and the relationship between the real estate price fluctuation and the amount of banks’bad loans. By building a transmission mechanism picture, the author tried to study the interaction mechanism among the real estate market, the monetary market and the banking sector. Through the theatrical analysis, the growth of bank credit has a role in promoting real estate price; the real estate price fluctuations can real estate price have an effect of further expansion of bank credit through the collateral effect, and also a have an effect of further tightening bank credit through the bank’s feedback mechanism. In practice, through the analysis of the causes of economic crisis in some developed countries and the economy and real estate market conditions at that time, we learned some lessons from it, and try to avoid the occurrence of similar situations in our country. This paper analyzes the volatility correlations among housing price and the money supply and bank stability based on the multivariate GARCH model. It has been found out that the volatility of housing price and the co-movement between housing price and money supply have significant impacts on the bank stability. Credit tightening and further price volatility of real estate are caused by feedback mechanisms of banks. Price fluctuations, credit fluctuations, and their co-movement have a strong GARCH effect. However, the policy stripping of non-performing loans has no continuity.