The Studies On Innovation Of China's Real Estate Finance

Real estate finance refers to the combinations of borrowing, financing and relevant finance services via credit and monetary circulation regarding to the real estate development, circulation and consumption. In recent years, China's real estate finance market grows rapidly, but comparing with the development countries, China's real estate finance market is not mature; therefore the financial innovations are expected.Taking the constraint-induced financial innovation theory by W. L. Silber, the regulation dialectic financial innovation theory by E. J. Kane, the transaction cost financial innovation theory by J.R. Hicks and J. Niehans and the financial innovation theories by institutional school into account, the motivations of the real estate financial innovation could be institution evolution, risk decentralization, regulation evading and wealth growth.Apparently, the Mortgage Backed Securities in America and Real Estate Investment Trusts are the output of financial innovations, and the innovations promote the development of the capital market and money market, enhance the competition within the finance industry, boost the efficiency of finance system, improve the finance structure and drive the financial deregulation of the development countries. Moreover, an additional important point is role of US government in the Mortgage Backed Securities.At present, the commercial banks, especially the state owned commercial banks, are inappropriately taking the responsibilities of promoting the potential real estate demands, which includes the residential consumption, as well as taking the risks consequently. Therefore the bank mortgages are currently the main channels for real estate financing, which roots in the immature China's financial system and leads to the significant liquidity risks.Obviously, it will significantly improve liquidity of assets by promoting the Mortgage Backed Security and Real Estate Investment Trusts in China's and it will resolve the liquidity problems in which the current liability could not persistent support the long term assets via bank loan facilities. Also, it is required by promoting the innovations that the financial system should be improved, the secondary market should be installed, the intact regulations and policies should be matured and the market conditions should be meliorated.