The Impact Of The Real Estate Price Fluctuation On Credit Risk Of Commercial Banks

The fluctuation of real estate prices is closely related to the credit risk of commercial banks.The bursting of the real estate market bubble often triggers a crisis in banks and even affects the entire financial system.In recent years,due to the continuous introduction of real estate regulation policies,the uncertainty of real estate price fluctuation has increased.For this reason,it is essential to study the impact of real estate price fluctuation on credit risk to maintain the stability of the banking and financial system.This paper combines theory and demonstration to study the impact of real estate price fluctuations on the credit risk of commercial banks.Firstly,this paper analyzes the relationship between these two factors,combs the relevant theories,and analyzes its mechanism.Secondly,using the data of 168 commercial banks from2008 to 2020,this paper studies the relationship between the two,and carries out stress testing through sensitive analysis,external factor analysis,and multi-factor analysis to study how the credit risk of commercial banks will change when they are impacted by different degrees of pressure.The empirical results show that there is a negative correlation between real estate price fluctuation and the non-performing loan ratio of commercial banks.When real estate prices fall,the non-performing loan ratio will rise,while when real estate prices increase,the non-performing loan ratio will decline.The stress testing results show that the decline of real estate prices will increase the non-performing loan ratio of banks;when real estate prices and the growth rate of regional GDP both decline,the impact on commercial banks will be greater;if factors such as the bank’s performance are at a poor level,the impact of real estate price fluctuation will be greater,and the credit risk of commercial banks will be higher.Since the development of the Internet in recent years is changing the economic pattern of China,this paper classifies the samples according to the level of Internet development.This paper synthesizes an Internet development index through principal component analysis and divides cities into class I,class II and class III through the K-means clustering algorithm.On this basis,regression and stress testing are carried out.The results show that in all types of cities,real estate price fluctuations have a negative impact on credit risk.When real estate prices fall by the same range,the credit risk of commercial banks is relatively low in class I cities and relatively high in class III cities.Finally,this paper puts forward corresponding policy suggestions based on empirical results from three levels: real estate,bank,and government.The real estate market should diversify financing methods and establish a risk early warning system.Banks should conduct credit management with a prudent attitude,regularly carry out stress testing on real estate loans,and steadily promote real estate financial innovation.The government should improve the relationship between supply and demand in the real estate market,implement differentiated regulation policies according to local conditions,and establish a shared database.