Research On Debt Default Risk Of Real Estate Companies And Its Influencing Factors

Since 2020,large listed real estate companies such as Thaihot Group and Evergrande Group have defaulted on their debts in substance.The real estate industry is highly related to China’s national economy and residents’ lives,and the risk of real estate corporate debt default will be transmitted to a series of market participants such as home buyers,upstream and downstream companies,and financial institutions.For this reason,preventing the default risk of real estate companies has become an important issue that the corporates and the government need to face.Based on the existing default cases,this paper analyzes the causes of debt default of real estate companies at the theoretical level from the perspective of capital chain of real estate companies.Firstly,by combing the relevant literature,the KMV model is chosen to measure the debt default risk of real estate companies,and the accuracy of the model has been checked.By combining the results of the KMV model measurement,the factors influencing the debt default risk of real estate companies’ operating,financing and investment activities are studied empirically.The results of the empirical analysis show that:(1)Operating channel,the decline in sales volume,gross margin and the slowdown of market house price growth will lead to poor sales return and higher debt default risk for real estate companies,and there is also a mediating effect of market house price on the sales volume and gross margin;the slow sales speed of inventory leads to the accumulation of inventory,and the high turnover of inventory with high leverage and rapid expansion will lead to a tight operating capital chain,which will lead to debt default.(2)Financing channels,higher financing costs of real estate companies will increase the risk of corporate default,the impact of housing prices on corporate debt default risk also exists on the intermediary effect of financing costs.Expand financing channels,for example issuing asset-backed securitization can help companies to alleviate liquidity problems,reducing the risk of corporate debt default.(3)investment channels,diversified business investment will reduce the level of corporate profitability and increase the level of corporate debt,leading to higher default risk of real estate companies;land capital investment and market cycle mismatch will increase the risk of corporate debt default,aggressive land acquisition companies have weaker risk resistance,and their default risk level is more sensitive to both sales volume and housing prices.The thesis suggests:(1)For real estate development companies,it is recommended that they pay attention to inventory management,expand financing channels and rational investment,the essence of which is to guarantee the healthy and smooth operation of their capital chains.(2)For the government,it is recommended to improve the asset securitization system of real estate companies,and to strictly control and supervise the quality of real estate asset securitization,to promote the healthy development of the asset securitization market of real estate companies.In addition,it is suggested that the government should carry out differentiated policy regulation for real estate companies.Real estate companies with tight liquidity are more sensitive to external shocks and more likely to default on their debts.