Research On The Relationship Between Commodity House Price Volatility And The Stability Of Bank Assets

There is a very close relationship between the real estate markets and the bank.On the one hand, the real estate companies can not absence bank which participate inand support.Most part of the real estate markets,as development market, demandmass scale of money. Supply and demand are inseparable from the financial support;on the other hand, the stability of banks’ assets be effected by the real estate pricefluctuations. However, in the indirect finance-oriented country, the real estateindustry’s dependant on bank credit higher, leading to China’s real estate credit risk ofthe banking system continue to accumulate, once the real estate market volatility,bank assets will inevitably be affected. As a capital-intensive industry, real estateindustry price fluctuations will not only affect the living standards and real estaterelated industries, will also be a threat to the normal financial order and the sustainedand healthy development.In this context, this paper analyzes the current development of China’s real estateindustry, summed up the main problems of the real estate market, combing the realestate price fluctuations on the stability of the transmission mechanism of bank assets,summed up the real estate price fluctuations on the stability of bank assets effects andempirical tests of the real estate price fluctuations on the stability of bank assets. Inthis paper, real estate price fluctuation and stability of the link between bank assetsconducted in-depth discussion for understanding our credit risk of the banking system,to achieve stable development of the real estate market to provide a reference.First, the real estate market price fluctuations through credit, liquidity andinformation transmission mechanisms affect the stability of the banking system. Pricefluctuations will affect the credit status of the borrower, banks face increased creditrisk. In the large proportion of real estate loans, the banking system will take a lot ofliquidity risk, capital structure mismatches will lead to short-term liquidity needs ofbanks in the lack of flexibility when faced with larger adjustment. Public access to thereal estate market as an important source of information, the bank’s real estatedevelopment and mortgage loans, business conditions can influence the public tojudge the real estate market, enlarge market sentiment.Second, China’s real estate market continues to expand the scale of investment,sales prices rose rapidly. Total investment in recent years, China has achieved rapid real estate development, real estate investment in total fixed asset investmentaccounted for about18percent, accounting for about10%of GDP, are far more thanthe internationally recognized warning level, the emergence of signs ofoverheating. Price of real estate soaring even more prominent, raised public concernsabout the real estate price bubble.China’s real estate continued abnormally fast insome areas led to a sharp rise in the real estate market speculation atmosphere, highprices have been far more than ordinary residents’ purchasing power; governmentthrough policy development and land supply control means to guide the developmentof the real estate market, but both of the central government and local governmentsare not entirely consistent with the objectives of local governments in pursuit ofpolitical that achievements have pushed up land prices pushing up the price pressure;addition, due to the different types of real estate profit margins vary greatly, realestate development companies are generally focused on high-priced commercialhousing development, China’s real estate market, resulting in low-cost commodityresidential housing is too small, the market structure is not balanced.Third, according to the basic value of real estate value method estimates thedegree of deviation, found the impact on the price level of income more significant,long-term demand factors play a more crucial role, while monetary policy instrumentsin the role of interest rate adjustments do not appear, the size of loans the impact ofchanges stronger.Based on the rate of inflation, loan growth, capital adequacy ratioand NPL rate stability index build to build banks from changes in the stability ofChina’s banking trends can be found in the stability of China’s banking industry afterWTO accession has been significantly improved, but in the After the subprime crisisemerged signs of decline.Empirical real estate price fluctuations on the stability ofbank assets, and found that price fluctuations can significantly affect the stability ofthe banking system, prices deviate from the fundamental value generated by thehousing bubble led to moral hazard and adverse selection problems led to theaccumulation of bank risk.