Research On Contagion Effect Of Debt Crisis Of Real Estate Enterprises

As an important pillar of China’s national economy,real estate has been showing a booming trend.From 2003 to 2019,the overall price of real estate has been rising,while a large number of market demands have driven the development of many industries.However,the leverage operation mode of the real estate industry has also bought a lot of hidden thunder for enterprises.When the real estate foam expands to a certain extent,business problems continue to accumulate,With the economic environment facing obstacles,the real estate industry is subject to more regulation and control,and the population has a negative growth trend and other factors,the falling point of the development of the real estate industry may appear.When the real estate market has a severe crisis,the industries closely related to it will also be impacted to a certain extent.The market investors are pessimistic about the real estate expectations,leading to the decline of house prices,and other related problems will follow.The characteristics of real estate enterprises affect the occurrence of their debt crisis and the time,path and scale of infection.Real estate enterprises are mainly connected with other industries directly through the supply chain.There are many upstream and downstream enterprises,there are complex transaction relationships between enterprises,the amount involved is huge,and there are many forms of payment.On the one hand,the asymmetry of information between creditors and real estate enterprises increases the possibility of relevant enterprise risks;On the other hand,the supply chain strengthens the relationship between real estate enterprises and other enterprises,which is highly contagious.Once a real estate enterprise has a debt crisis,its close relationship with other enterprises will cause other related companies to face the risk of default and trigger the butterfly effect.At the same time,due to its own particularity,real estate enterprises have similarities and debt relationships with other external economic entities,and their debt crisis will further infect the same industry,financial institutions and local governments.Taking the debt crisis of China Evergrande Group as the research object,this paper discusses the evolution process of the debt crisis of China’s real estate enterprises on the basis of previous studies,and shows the dynamic process of the accumulation of real estate enterprises’ business problems,the outbreak of debt crisis,and infection.This paper studies the relationship between the real estate debt crisis and macroeconomic entities through case study,investigation,qualitative and quantitative research.The research content is the formation and infection process of debt crisis insurance of real estate enterprises,including macro and micro levels.The former analyzes the causes of the debt crisis of real estate enterprises and the mechanism,path and effect of the debt crisis in upstream and downstream enterprises,the same industry,financial institutions and local governments;The latter confirmed the cause and contagion effect of the real estate debt crisis in financial aspects.Finally,the paper puts forward countermeasures and suggestions to deal with the contagion effect of the debt crisis of real estate enterprises from four aspects: the benign guidance of regulatory authorities,the increase of information transparency of real estate enterprises,the strengthening of local government debt management,and the strengthening of bill risk identification.Through the above research,this paper finds that the real estate debt crisis will have a contagion effect on external economic entities,and its contagion effect is different in different economic entities,with a wide range of contagion and a long chain.The boom of real estate can promote the development of various macro-economic entities,and once the debt crisis of real estate enterprises will cause social contagion effect.The major causes of the real estate debt crisis are the change of policy direction,the downward economic environment,the pressure of high leverage,the failure of diversified businesses to meet expectations,inventory,dividend and other problems.Due to the existence of multiple paths of contagion,the real estate debt crisis will infect upstream and downstream enterprises,the same industry,financial institutions and local governments,causing varying degrees of impact on all units.Among them,upstream and downstream enterprises have direct business relations with the real estate enterprises in crisis,and the effects are extremely obvious.The risk will further make enterprises in the endorsement chain suffer from contagion effect through contingent liabilities,which further expands the scope.Due to the influence of market sentiment,enterprises in the same industry make investors and consumers distrust the real estate market,resulting in the decline of stock prices and the rise of capital cost,which further increases the difficulty of industry financing.Further conduction of market sentiment will spread to financial institutions and local governments through collateral value,fiscal revenue and other aspects,causing a certain impact on them.