Financial Risks Control And Prevention In China's Real Estate Industry

In recent years,China's real estate industry has been playing an increasingly important role in the national economy.At the same time,real estate finance has also developed rapidly and become an important support structure for real estate industry.Real estate financial institutions,like banks, have had to undertake more financial risks under this 'excessive' real estate development and concentrated bank credit.This paper is an in-depth look at these real estate financial risks and methods to minimize or prevent them from the point of view of China's financial institution.By using both quantitative and qualitative analytical methods,the paper comes to the conclusion that a real estate bubble currently exists in China.By using empirical analysis,the authors suggest that due to a concentration of real estate bank loans,China's banking industry bears a much greater risk than other country's banking industry.It also mentions that there is a strong linkage between the real estate bubble and total bank credit.This implies that if the banks' line of credit were increased or its credit conditions became more relaxed,real estate speculation will cause prices to rise and the real estate bubble will probably expand.When the real estate bubble expands, the increase in real estate price will encourage more speculation,which causes the banks credit to expand even more.In this paper,a comparative analytical method is also utilized to compare the real estate situations between our country and the United States during the sub-prime mortgage crisis.By comparing the similarities and learning from those lessons,solutions can be created to deal with the same situations.This paper consists of five chapters in total.Chapterâ… introduces the thesis background, research methodology and structure.Chapterâ…¡presents the basic theory of financial risks and analyzes the actuality in China.It distinguishes the differences between the following concepts 'real estate price bubble','real estate economy bubble',and 'foamed economy'.It also makes a judgment whether or not there is a real estate bubble in China and points out that there is a higher degree of dependence on bank credit in China's real estate industry.It analyzes the relationship between real estate bubble and bank credit concentration.Chapterâ…¢analyzes financial risks in China's real estate industry and lessons from other countries.It studies the problems and causes of financial risks and gives enlightenment to China by analyzing the U.S.sub-prime mortgage crisis and Japan's financial crisis.Chapter IV is about financial risks control and prevention.It gives advices and suggestions to prevent financial risks from various points of view.