| Real estate industry is an important industry of the national economy. Since 2003, real estate industry of our country entering the high-speed development orbit, housing prices climbed all the way induced all walks of life worried about real estate bubble and the financial risks. Although many studies empirically analyzed the existence of the bubble and its scale, and its formation mechanism was discussed thoroughly, but the quantitative evaluation of real estate financial risk and formational mechanism of the system have not been in operation. Although real estate financial risk has become a public consensus, the size of the bubble is not equal to that of the financial risk directly, and the measure of the bubble's degree can not provide guidance immediately for risk prevention to the banks. The lack of real estate quantitative evaluation of financial risk results in difficultly balancing the respective interests by formulating appropriate policies, and realizing the benign interaction of finance and real estate industry. From the historical experience, a lot of countries in the course of urbanization have experienced real estate bubble and the impact of financial risk. China's urbanization has far from taken to an end, from the international experience, studies on the formation mechanism of real estate financial risk and preventive measures can nip the risks in the bud, which is the responsibility of the theoretical study.Based on the practical needs, the paper focuses on the real estate financial risk, takes its size assessment as a key point and thoroughly analyzes the formational mechanism of financial risk under the real estate bubble. The paper is divided into six chapters. Chapter 1 is the introduction, mainly introduces the background and significance, research methods and ideas, innovation and insufficient.Chapter 2 analyzes the historical evolution of real estate financial development. With the standard of China's financial system and major changes in the business, and reference for the vicissitude of urban housing system and the development of real estate, this paper divide the development of real estate finance into four historical stages, which are the first step of supporting commodity house construction, supporting consumption on housing development in an all-round way, deepening the progress and controlling the severe risks. Through the first two stages of development, China has built up a complete real estate finance system. The following two stages of development show that real estate finance can not be in stable operation without the healthy development of the real estate market. After two decades of development, China has formed Chinese characteristics of real estate financial system which treats the bank as the core. From our products, real estate finance system has given priority to the bank credit, and trust, equity and debt financing for auxiliary. Real estate investment and consumption mainly come from commercial credit, and bank loans participate in various aspects of industry chain. Thus bank has become the main body that undertakes real estate financial risk.Chapter three analyzed the current situation and the basic types of financial risks in real estate in our country. Based on the classification of real estate financial risks, we quantitatively estimate credit risks of real estate development loans, trying hard to give an answer in the question that how big financial risks that real estate market are taking. From the macro level, commercial real estate loans represent following features:high credit quality, declining credit risks year by year, low percentage of non-performing loans; from the micro level, credit risks and operational risks mainly consist of real state financial risks, whereas credit risks are the main body.In terms of distribution of risks, land reserve loans, personal housing mortgage, development loans are the three decisive factors. But personal housing mortgage burden a relatively small credit risk because of the fairly high down-payment and reasonable real estate consumption structure. Yet land reserve loans face three credit risks and own a higher rate of non-performing loans.On accounting of financial condition of enterprises is the key factor assessed by commercial banks, we must take an integrated measurement on risks of development loans, considering lacking of commercial banks credit date at the same time. This paper exemplifies real estate listed company, choosing company's financial performance as research project, and analyzing risks'progress and distribution of the borrowing enterprises. It is shown by risks'progress that we can divide the credit risks of real estate development loan into two periods. The first period was from the year 2003 to the year 2007. In this period, financial targets of enterprises had generally risen, and year 2007 saw listed company of real estate , reaching climax. However the financial targets in short-term repayment capability, long-term repayment capability and cash-flow condition somehow indicated that financial risk had been gradually accumulated during this period. In 2008, financial performance of real estate enterprises hit bottom and real estate financial risks emerged. Compared with year 2008, financial risks in 2009 had declined. In terms of distribution of borrowing enterprises, common business took a percentage of 73.66%,71.66%,73.45% in the year 2007,2008,2009 respectively. In 2009, the proportion of common business closely tied to year 2007, higher than 2008; alert companies of low risks accounted for 21.31%, risen by 2% points than 2007; high venture enterprises took a proportion of 5.24%, dropped by 2% and 1% than 2007 and 2008 respectively. While in comparison with year 2007 and 2008, alerted enterprises climbed, whereas enterprises ran high risks failed, which meant risks in real estate circle had expanded. All in all, this chapter suggests that the bubble size in real estate is not equivalent to the degree of financial risks. When in bubble expansion, or rather, housing price was jumping (2003-2007), financial performance had kept getting better. But over-investment and excessive fast development in real estate set a dangerous precedent for weaker repayment capability, so financial risks were invisible at this time. Hence as housing price grow rate slowed (2008-2009),financial performances became worse and risks became visible.The fourth chapter pointed out risk comes from bubble from the perspective of the logical interpretation. At the present there is large quantity of demand in the real estate area, the real estate finance is more secure. The real hidden danger is the risk caused by the ups and downs of prices. We are easily puzzled through the performance of the stable prices that what the risk is if the prices do not fall and the financial bubble does not be broken. In this view, we should try to understand the credit risk of real estate loans from the modern definition that decline of the borrower's quality of the credit should be taken into consideration, the decline of the borrower's ability which caused by the rapid decline in housing prices since 2008 should be focus on the most. Moreover, the Japanese real estate bubble and U.S. subprime crisis are all caused by over-optimism on house prices and the short-sight about the crisis, over-optimism and short-sight is the important part which constitutes to the crisis in the formation mechanism of the real estate. The two bitter lessons of history show that, whether in banking dominated financial system or market dominated financial system, financial risks in real estate caused by the real estate bubble, it reveals us any financial systems will lead to the inherent instability which caused by credit expansion y. In this chapter we will prove the current existence of the real estate bubble on an empirical test. Discussion on the domestic real estate bubble are very heated, this article do not give a definition of bubble or do some tests in depth, because this is not the focus of this article, but we make a conclusion on the basis of domestic research, analysis and use some indicators cointegration test method to test. The index system of the real estate bubble shows that there is no real estate bubble in China, from the national level, while in Beijing and Shanghai, on the regional level, most indicators in both areas over or near the critical value of the bubble, that is to say there have been a bubble. In order to overcome the problem index test method is not conscientious and careful enough, this chapter has used cointegration methods to analysis the situation of Beijing and Shanghai housing market. The results show that from the 1st season in 2002 to the 2nd season in 2010, ignoring the supply and demand the price expectations has a significant impact on the real estate price, it shows that the price formation contains a significant speculative component, there has been the housing market bubble in Beijing and Shanghai.Financial risk of the formation mechanism of real estate, which is in the state of the bubble economy, has been studied, regarding the bank credit expansion as a starting point in Chapter 5. From institutional perspective, the increasing price of real estate reducing the agency costs of lending business and increasing the value of collateral, as a result, banks tend to make lending decisions. Procyclicality of regulatory capital, risk provisions and accounting principles will all raise bank credit capacity expansion which is on the stage of the real estate bubble. In the credit decision-making process, bounded rationality bankers will show conservative bias, heuristic bias, framing error, the psychological phenomenon of overconfidence and bankers will also follow the herd behaviors. This makes the banking system in the bubble period suffering from a "crisis Shortsighted". Institutional defects and the limited rationality of credit officers lead to excessive credit expansion of banks in the period of the inflation of bubble economy. The expansion of credit easily makes bubbles. Availability of credit is an important factor affecting the asset price. Motivation of the borrowers' transfering risks stimulates investors to bid up the price above the fundamental values, leading to price bubbles. People's expectations of future credit expansion and uncertainty in credit expansion will increase the severity of the bubble. Bubble inflation makes feedback on credit expansion, which letting the situation be worse. In the process of credit expansion and bubble inflation, the borrowers' debt ratio is rising constantly and the number of speculative enterprises is increasing. Purchase requirements under the myopic price expectations are advances. Consumers have been gradually driven out and the proportion of speculators is jumping. Enhancement of asset-liability ratio and changes in the distribution of borrowers weaken the solvency of the borrowers. Once the policy reversals or the revenue impact of the real sector and bank credit expansion below the requirements, the bubble will burst and financial risk will appears.Chapter 6 learns from foreign experience in financial risk management of real estate and explores how to prevent and transfer financial risk of real estate. Since in the process of the formation of financial risks of real estate, credit expansion is the core, establishment of prudent management and monitoring system to prevent excessive expansion of bank credit is the inevitable choice. In order to inhibit the excessive of credit expansion in the mainland of China, first we need to make Counter-cyclical credit rules and the mainly rules include the introduction of counter-cyclical capital requirements and provision for accrual method of cross-cycle. Secondly, to create a monitoring and warning system of the financial risk of real estate prevents "crisis Shortsighted". According to the different severity of the financial risks of real estate, regulators can take measures of prompt risk, requiring banks to conduct stress tests. Meanwhile, there is a need of a system of dynamic tracking changes in borrower solvency and a perfect full control of real estate lending risk. In the long run, it is a effective way that learn from the experience of the United States and improve the level of risk-sharing market, real estate finance to spread the risk of real estate finance. The viable option of broadening the financing channels for enterprises the primary market is to develop real estate investment trusts. And because of this, China needs a clear legal and regulatory framework to realize the neutrality of tax and relax restrictions on institutional investors and to train professionals. Chinese secondary market of real estate finance is still in the stage of infancy. According to the problems of mortgage securitization, our next efforts are in the direction of perfecting the system of credit rating and securitization legislation professionally.The main innovation of this paper is that:1. At the practical level, the paper analyzes in quantization the size of financial risks of the real estate in our country from the perspectives of time(risk evolution) and space(borrower distribution). For the time being, domestic studies mainly illustrate the size of financial risks of the real estate through bubble severity. However, firstly, the size of bubble does not directly equate to that of financial risks. At the phase of inflating bubble, financial indicator of the real estate enterprises in our country was actually getting better constantly, while the risks seemed to be decreasing. Secondly, bank credit was provided with the internal motive power to expand during bubble inflation. As we are unable to predict whether bubble would be inflating or not and when to burst, such kind of similarity does not possess the operational ability in practice. It is difficult for such similarity to offer direct help with bank credit decisions and restrain the excessively expand of bank credit. The paper proceeded from the fundamental condition that credit risk primarily relies on the borrowing enterprises financial situation, taking the listed companies as a sample, analysis the risk evolution in the years from 2003 to 2009, picks ten noteworthy indicators out of the enterprises financial indicator system and calculates the sizes of risks in the years from 2007 to 2009. Studies demonstrate that the real estate financial risks of our nation was at the phase of accumulation before 2007; during the following two years, the financial risks started to emerge. In 2009, normal type, vigilant type and risking type of enterprises were 73.45%,21% and 5.24%in proportion respectively featuring the amount of high-risk enterprises was decreasing while that of low-risks enterprises increasing relatively. The paper is looking forward that such visual analysis of risk evolution and borrower distribution would be conductive to bank credit decisions and precautions of financial risks.From the perspective of theoretical innovation, the paper deeply analyzes the formational mechanism of real estate financial risks under bubble. Although a majority of scholars think that the real estate financial risks originate from the house price bubble, they have never launched a systematical and deep study on the formational mechanism of the real estate financial risks under the bubble. It is proposed here that during the formation of the real estate financial risks, the expansion of credit is the core. This paper goes into the mechanism of the expansion of credit and its feedback effects on the real estate bubble and analyzes the causes of weakening borrowers'debt paying ability from the points of systematical defects and bounded rationality. Based on this, the paper constructs a systematical framework of managing the real estate financial risks. The all-around studies about the mechanism of the real estate financial risks formation have an important reference value to make precautions on the real estate financial risks. |
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