Financial Markets Discipline And Real Estate Market Development

The real estate industry is a typical capital-intensive industry, its development is inseparable from the strong support of funds. Since2003, China’s real estate market has faced continued macroeconomic regulation and control, market participants has been faced with the growing financial market financing constraints, however, the real estate market has showed a more strong momentum of development. When the capital mobility is in a regulated institutional framework, when the financial market is in the face of severely constrained circumstances, China’s real estate market has been rapid development and expansion is indeed cause for concern. The mystery of the real estate market is essentially a problem of industrial development in the financial constraints, needs to be answered is how to break the huge amount of money from financial regulation and intervention in the financial market to the real estate market. This paper argues that to understand the financial constraints of the real estate market development needs from the microscopic point of view, especially from the perspective of the real estate development enterprises to proceed. From the perspective of the entire real estate market, the real estate development enterprises is the core of the main micro, the financing behavior of the real estate market was done by them ultimately, it can be said that the real estate development enterprise’s market behavior is what makes financing barriers and institutional barriers continue to be a breakthrough, achieved funding from the financial markets to the real estate market transfers. In view of the special status of listed enterprises, this paper starts from listed enterprises, examines its "financing channel" effect from the perspective of the interaction between its land investment and share price.In this paper, on the basis of mechanism analysis, we use the micro data of investment and stock price of listed real estate enterprises from2004to2012to test for Stock-land interaction mechanism. The main conclusions are:(1)The behavior of land investment have a significant positive impact on the stock price, but it doesn’t mean that taking advantage of more funds will be able to obtain greater excess returns, investors favored more reasonable behavior. Particularly noteworthy is that the stock price effect between state-owned enterprises and non-state-owned exists a great difference.(2) real estate investment will increase significantly after1-2quarter. Different options on the nature of enterprises, non-state-owned’s overall investment effect is stronger than state-owned enterprises,the time from the stock rose to the conduction is also longer.(3) Chinese real estate market development is highly correlated with the expectation of market participants,and the relationship with interest rate controls, enterprise’s own financial constraints and other factors is very small, so from the perspective of the financial regulation, the macro-control policy is basically ineffective.