The Effect Of Fluctuation In House Price On Mortgage Channel Of Corporate Cash Holdings

The State Council of China issued the "Circular of the State Council on Further Deepening the Reform of Urban Housing System and Accelerating Housing Construction"(hereinafter referred to as the "Circular")in July 1998,clearly setting forth the overall cessation of the physical distribution of housing and the gradual implementation of the monetization of housing distribution.It symbolizes the end of the welfare housing distribution system.This policy leads to the promotion of the liquidity,the development of the real estate market,and In 2002,the introduction of the system of land bidding,auction,and hanging meant that the real estate market had completely entered the process of market-oriented transactions and caused another round of crazy growth in housing prices.The volatility of house prices has attracted the attention of many scholars.Some scholars have studied the effects of house price fluctuations on mortgage guarantee channels,that is,how house price fluctuations affect the company's behavior through the value of collaterals.Inspired by this,this article will explore whether house price fluctuations can be passed.The mortgage guarantee channel affects the cash holding level of the company.If it can,how does it affect the degree of influence?This paper first introduces the background of real estate market development,and then through literature review and theoretical analysis,according to the conduction mechanism of mortgage guarantee channels,this paper empirically analyzes how house price volatility affects corporate cash holdings through mortgage guarantee channels,and makes useful exploration of the empirical results Comments,and finally put forward targeted suggestions and countermeasures.The result of this study shows that the rise of the value of the enterprise mortgage asset brought by the rise of the house price makes the enterprise hold more cash,which supports our hypothesis of cash-holding agent theory.Based on this,we propose two major countermeasures and suggestions.First,companies should determine the level of cash holdings based on their own operating conditions and financial conditions,understand the law of diminishing marginal effects of cash holdings,understand that “there is too little”,do not blindly pursue high cash holdings,and second,companies based on their own The stage of development and the competitive environment to determine whether to increase the level of cash holdings;Third,companies choose residential properties than commercial housing in the increase in corporate cash holdings is more effective;fourth is to improve the information transparency mechanism,properly handle the principal and agent conflicts.