Chinese Real Estate Credit Risk Of Commercial Banks

Since the implementation of the housing system reform in 1978,the development of real estate industry has shown a trend of rapid growth in China.During this period,due to the fact that the real estate industry is a capital-intensive industry,its demand for high capital has also contributed to the occurrence and development of the real estate credit.At the same time,the real estate credit and the real estate industry are complementing each other;the real estate credit business has also supported the development of the real estate industry which is characterized by its high leverage for a long period of time.However,in recent years,the facts that the real estate prices continue to rise,the supply of commercial housing has exceeded demand,and the speculative atmosphere has been strong,have brought great risks to the real estate credit business and the industry.For this reason,Chinese Government put forward an significant economic task of “de-leveraging” in the the Central Economic Work Conference held in late 2016.“De-leveraging” has played an important role in protecting the security of credit and asset of commercial banks and stabilizing the financial system under the current circumstance.In the process of “de-leveraging”,China has brought forward a series of supplementary policies in the past 2 years.For example,the “Notice on Regulating Bank and Credit Operations by China Banking Regulatory Commission “issued in 2017 has gradually restricted the capital from commercial banks to the real estate industry,attempting to reduce real estate's dependence on commercial banks,and reduce the financial risks brought by high leverage to commercial banks.At present,"de-leveraging" has started to take effect in reducing risks of real estate credit for commercial banks,and has promoted the transformation to new financial channels other than bank credit.In the next a few years,reducing credit risk of commercial bank through measures of“de-leveraging” remain a necessary path to protect the credit and assets security of commercial banks and the stability of the financial system.And therefore,the study on real estate credit risk is of theoretical and practical significance.This paper conducts a careful and detailed study on credit risks of real estate industry aiming at providing effective recommendations for protecting credit and assets security of commercial banks and the stability of the financial system.Chapter 1 introduces the background and significance of the study on real estate credit of commercial banks,and refers a large number of relevant documents at home and abroad from the perspectives of real estate credit risk factors,prevention measures,measurement and control of commercial banks.Chapter 2 elaborates the credit risks that the commercial banks have encountered through the development of the real estate industry from 1988 to the present and the policies implemented to protect the security of real estate credit and funds of commercial bank.Chapter 3 mainly analyzes the major problems of real estate credit risk of commercial banks caused by real estate companies and commercial banks themselves,and national policies,from 4perspectives of credit risk,liquidity risk,policy risk and operational risk of real estate companies and of commercial banks.Chapter 4 objectively studies the relationship between real estate industry and credit risk of commercial bank using panel model,withnon-performing asset ratio representing commercial bank credit risk,with housing sales area representing development status of real estate,the conclusion is drawn: the impact of real estate industry to credit risk of commercial banks is greater than that of other industries,and the development of the real estate industry is inversely proportional to the credit risk of commercial banks.Based on the previous qualitative and quantitative analysis,Chapter 5provides effective and practical recommendations for credit risk management of real estate industry from the 4 perspectives of strengthening credit management of commercial banks,preventing liquidity risk transmission to commercial banks by improving financial system,strengthening policy regulating,and improving the commercial bank credit management process.