A Study Of The Effect Of The Bank Credit To The Real Estate Bubble

Looking over the previous domestic and foreign real estate bubbles, we found acommon phenomenon: either the developed countries or the newly industrializedcountries, the process of forming of the real estate bubble shows the highcorrelation between the bank expansion of the credit and the real estate bubble. Thispaper presents a closely related problem with the current situation in our country: whatkinds of the relationship between the bank credit and the price of the real estate? Is thegrowth of the bank credit leading to the rising price of the real estate? Or is the risingprice of the real estate leading to the growth of the bank credit? Do the bank credit andthe rising price of the real estate interact?The author dose the Empirical test between the bank credit and the rising price ofthe real estate interact.The author has selected38groups quarterly dates which fromthe1quarter of2004to the2quarter of2013.The empirical results show that: the bank credit is the Granger of the price of thereal estate; the price of the real estate is the Granger of the deterioration rate of the bankcredit; we get that there is a long balanced relationship among the bank credit、theprice of the real estate and the deterioration rate of the bank credit. The rising of thebank credit causes the rising of the price of the real estate and the rising of the price ofthe real estate causes the rising of the deterioration rate of the bank credit. The longbalanced relationship roots in the bank credit. Only controlling the expansion of thebank credit, can we effectively suppress the rising of the price of the real estate.The conclusion of the study is generally applicable to the management of the realestate bubble risk and it can promote the coordinated development of the China’s realestate market and the bank credit system. The conclusion has the great and practicalsignificance for suppressing the real estate bubble risk and promoting the developmentof the economy from the point of the bank credit.