Research On Impact Of Risk Of Real Estate Loan To The Fragility Of Our Bank System

Since1998, China has started the reform of the housing monetization; China’sreal estate industry gradually enters a booming period. Especially in recent years,China’s real estate price has been rising sharply, and residents still maintain a hotdemand for real estate. Banks grants constantly additional loans to the real estateindustry driven by huge profit, making the house price much higher. Loanconcentration of commercial banks is a normal phenomenon in China. The real estateindustry loan weights20%of the total credit, which is just second to themanufacturing sector loan. Further more, the enterprises whose asset-liability ratio ishigher than70%are highly dependent on the financial support of bank credit. It canbe said that credit funds in China’s commercial banks have been kidnapped by thereal estate industry. Due to the special nature of the real estate, it also both has thecharacteristics of the physical assets and virtual assets, its price volatility is higherthan the general physical assets, and their capital chain is also very fragile. The risk isgradually accumulating in the bank system. The object of this paper is how real estatecredit risk make impact on China ’s fragile banking system, that is, whether the realestate credit risk would endanger the sound operation of the banking system. Thisarticle in the theoretical part analyzes the status of China’s real estate industry, therelationship between the current situation of the real estate credit, real estate pricesand real estate credit risk, the risk analysis of real estate development loans andindividual housing loans. By the results of qualitative analysis and empirical analysis,real estate loans accounted for the proportion of domestic credit and the priceearnings ratio is positively related to the vulnerability of the banking system in China.This indicates that the banks must strictly control the real estate scale, focus and bealert to the risk of individual housing loans to prevent the real estate credit risk, inorder to prevent the real estate credit risk of the vulnerability of the banking system tofurther expand.