Research On The Correlation Between China’s Real Estate Market Bubble And Systemic Risk Of Banks

Cases of financial crisis caused by real estate bubble are very common.With the continuous development of urbanization in China,the real estate boom will continue.Therefore,the possibility of financial crisis caused by the systemic risk transmitted from the real estate industry to banks and other financial institutions is an important topic that we pay attention to in financial research.And if the real estate bubbles exist,it means that commercial banks have so far of the real estate industry credit investment may be supersaturated,and the systematic risk is likely to be high,which will raise funds chain vulnerable degree.Our country has not yet occurred adverse situation of capital chain rupture up to now,but what if the economic environment change and impact the banks,the increase of systemic risk from banks will affect the stability of our national economic system.Achievements of recent research and practice at home and abroad for reference,this paper firstly combed the systemic risks associated with the real estate bubble and bank system in order to make clear about the market price of the real estate bubble and banking systemic risk.The mechanism of interaction and the conduction mechanism of the financial crisis will also be discussed.And then we analyzes the current situation of the real estate market bubble and the systemic risk from banks;Secondly,we selected 18 indicators that contribute to the volatility of bank systemic risk from four aspects,namely macro,banking,securities and international impact.According to the data of China from 1995 to 2017,SPSS is used for principal component analysis to construct the comprehensive total component index to measure the systematic risk of Banks.At the same time,the real estate bubble index is selected.Considering that the bank’s loan to the real estate industry plays an important role in the real estate market,we calculate the growth rate of real estate loan and take it as a variable.Then,for the consideration of collinearity among economic variables,the correlation among bank systemic risk,real estate loan and real estate bubble was studied by building the VAR model with the help of overimpulse response,variance decomposition and granger causality.The empirical results finally prove that there is a positive correlation between bank systemic risk,real estate price bubble and real estate loan growth rate.The expansion of lending will drive up property prices and increase systemic risk in the banking system.At the end of this paper,on the basis of the full text of the research conclusions,it is proposed to proceed with macroeconomic reform that our government should do a better job in adjustment of industrial structure,and strengthen the legislation and enforcement of supervision;At the financial level,while strengthening the control of real estate related loans,we should expand other financing channels for real estate enterprises to reduce their dependence on bank loans,and we should also prevent the impact of international hot money on the domestic financial system.