TAILIEUCHUNG - What determinants China’s mortgage credit boom

In this paper we investigate the relationship between housing prices and mortgage lending in China. We analyze a sample of 28 Chinese domestic commercial banks during the period between 2003 and 2009. Our results suggest that the urbanization process in China contributes substantively to the mortgage credit boom. We find a distinct behavior of the economic housing market, in which the housing price and mortgage credits affect each other adversely. The monetary policy has a greater impact on the mortgage lending than banks’ characteristics. Raising bank reserves is a relatively effective instrument to control the mortgage credit boom. Our findings have important policy implications and account for the existing monetary policies which are implemented in China. | Journal of Applied Finance Banking vol. 4 no. 6 2014 19-28 ISSN 1792-6580 print version 1792-6599 online Scienpress Ltd 2014 What Determinants China s Mortgage Credit Boom Ming Qi1 and Chengcheng Zheng2 Abstract In this paper we investigate the relationship between housing prices and mortgage lending in China. We analyze a sample of 28 Chinese domestic commercial banks during the period between 2003 and 2009. Our results suggest that the urbanization process in China contributes substantively to the mortgage credit boom. We find a distinct behavior of the economic housing market in which the housing price and mortgage credits affect each other adversely. The monetary policy has a greater impact on the mortgage lending than banks characteristics. Raising bank reserves is a relatively effective instrument to control the mortgage credit boom. Our findings have important policy implications and account for the existing monetary policies which are implemented in China. JEL classification numbers D120 G20 G180 Keywords mortgage housing price bank credit urbanization 1 Introduction Over the past decade both the mortgage market and property sector have experienced a dynamic change. The current financial crisis which starts from 2008 and makes the whole banking industry suffer is largely attributed to the meltdown of US subprime mortgage market. The rapid growth of housing prices and mortgage credits has been extensively documented across many countries. Miles and Pillonca 2008 Wolswijk 2006 Meanwhile China as one of the largest emerging markets has witnessed the soaring property price and mortgage credit boom in domestic market. Liang and Cao 2007 Figure 1 illustrates the movements of mortgage loans and property prices in mainland China respectively. In an international context it is a stylized fact that the amount of bank lending is strong correlated to the property price. Many empirical studies have highlighted a strong correlation between bank lending and property .

• Ngân hàng - Tín dụng
• Housing price
• Bank credit
• China’s mortgage credit boom
• Mortgage credits
• Existing monetary policies
• Asymmetrical housing price reaction
• Elasticity of price change
• Population change
• Housing supply
• Summary of thesis Economics development
• Summary of thesis development
• Listing price strategy
• Selling price
• Family housing market
• RMB exchange rate expectations
• China's housing price fluctuations
• FAVAR model
• Degree of reversal intervention
• RMB exchange rate expectations explain
• transaction costs
• selling land
• real estate investment
• housing sales skills
• cost of the purchase price
• real estate
• Real estate markets
• Hosing price
• Corporate innovation in China
• Corporate innovation
• Perspective of innovation