| In recent years, with the rapid development of the real estate market in China, the discussion about whether the real estate market is overheating, and there is a serious foam problem or not becomes increasingly fierce up. Bubble makes asset price distortions and resource misallocation. It threatens the healthy development of the overall economy. The characteristics of the real estate industry and the close relationship with banks further deepen the financial system's vulnerabilities, even lead to the sudden breaks of bank capital chain and, at worst, trigger financial system crisis and harm financial security. Although the real estate bubble doesn't necessarily mean that appear bank crisis and the bank crisis is not necessarily mean the happening of the real estate bubble, in many cases, the two phenomena are as twin brothers, go hand in hand. Whether in the developed countries or in the developing countries, the real estate bubble and financial crisis have very significant connections. In the last twenty years of the 20th century, many countries and regions have the painful experience that bank credit in the real estate industry has a rapid expansion and then the real estate bubble burst quickly, such as the savings and loan crisis in America, the collapse of Japan's bubble economy and Southeast Asian financial crisis.Within the thirty years of Reform and Opening up, our national economy has made a rapid development and people's living standard has improved greatly. The deepening of the land use system reform and urban housing system reform has made substantial progress. The construction pace of houses accelerated and housing consumption started effectively. The housing conditions of residents have improved greatly. The development of urban real estate market in China played an important role in stimulating economic growth and improving people's living standard. The real estate industry has high relevance degree and strong driving force. It has become a pillar industry of the national economy in China. The real estate industry is a capital intensive industry; its development requires a lot of financial support. The promotion and support of commercial banks to the real estate industry have changed from the past simple enterprise development loan to both the investment and sales support. Before 1998, the main object of real estate credit is the real estate development enterprises. After 1998, real estate credit began to expand to the personal housing consumer credit. Bank credit fund became the main source of real estate funds.At present, China's real estate financing business is basically built on the bank credit-led basis. In this case, Bank credit will have a profound impact on macroeconomic by influencing the price of real estate and this effect is increasingly enhanced with the rapid development of the real estate market and the increase in the proportion of the national economy. Studies have shown that the financing of entire real estate industry is concentrated in the banks, which is necessarily easy to change the real estate market risk into bank credit risk. So that banks face a potential financial crisis. China's real estate over-reliance on banks, making China's banking system has accumulated a large amount of real estate financial risks. Once the real estate market collapses, the banking system will inevitably be affected. In this case, the theoretical analysis and empirical research of the relationship between real estate prices and bank stability to promote the coordinated development of real estate and banking have a very important theoretical and practical significance.At present, although there is a lot of research on real estate, because the process of China's real estate market is not a long time, and some of the necessary databases and other research infrastructure are not satisfactory, most of the real estate researches stay in the traditional qualitative description stage. Comprehensive studies that combination of foreign theoretical models about the relationship and empirical studies of China's real estate are rare. Therefore, this study seeks to learn from foreign advanced theory and modeling approach about the relationship between real estate prices and bank stability, using research methods that a combination of theory and practice, qualitative and quantitative analysis, normative analysis and empirical research. On the basis of descriptive analysis about the current situation of China's real estate industry, we make the qualitative and quantitative analysis about relationship between real estate prices and bank stability.In this paper, we obtain empirical results through the use of China's thirty-one provinces and cities data. It shows that China's real estate prices and real estate credit has very close ties. A large number of bank credit money into real estate market increases the risk of the banking industry. The per-capita disposable incomes of urban residents and interest rates have a significant positive effect with real estate prices. The empirical test results of this paper support the deviation hypothesis, which suggests that larger departures of house prices from their fundamental value increase the bank's risks. At last, for the healthy and orderly development of China's real estate market, this paper puts forward the corresponding policy recommendations based on the current problems of China's real estate market. |
