Research On The Perspective Of Network On Housing Price And Corporate Investment And Financing Interaction

In this thesis, I used a network approach to study the mechanism of interactions between housing prices and real estate enterprises’investments and financings in China. Based on the analysis of this mechanism, I established a dynamic model of single panel data and a simultaneous equations model to do empirical analysis. I expected to precisely quantify the contagion effects within the real estate market by including more interaction factors.The main conclusions of this research are:the city’s housing price decreases by 2 yuan if the mean housing price of its associated cities decrease by 1 yuan; the real estimate enterprises reduce their investments by approximately 0.08 yuan in response to 1 yuan decrease of the city’s housing price. On the other hand, the enterprise’s investment decreases by 0.91 yuan if the mean investment of its associated enterprises decreases by 1 yuan; the decrease of 1 yuan investment will surprisingly lower the housing price by 4 yuan, and reduces the investment of the next period by 0.46 yuan as a consequence. On a macro scale we can see a domino effect in the contagious networks of enterprises and cities. I also found that this contagion effect also exists in the interaction between enterprises’financing and housing price. Apparently the interactive network plays a crucial role in the fluctuations of housing price and enterprises’ investments and financings.In summary, this work shows that the real estate market in China does have a large contagion effect within the networks of participating enterprises and cities. To avoid turbulent impact on the nation’s economy from housing price volatility, we need to control fluctuations of real estate enterprises’ investment and financing in a rationale range. According to my research, I suggest that China’s real estate enterprises should be given more power to play a pivotal role as bridge of this interactive network through various means, such as accelerating its own reform to promote the market interaction actively, reducing the enterprises’ financing cost together with control of housing prices, stabilizing the prices of upstream construction materials and creating a good environment to stimulate investments.