Study On Supervision Of Real Estate Finance Based On The Prevention Of Banking Systemic Risk In China

The international financial crisis triggered by U.S. subprime mortgage crisis hashad a huge impact on international financial industry and macroeconomics, theregulatory authorities in Europe and the United States are keenly aware of destructivepower of systemic risk. In the post financial crisis era, the prevention of the bankingsystemic risk has become the most concerned issue of the world of theory along withsupervision authorities of all countries.The purpose of this paper is to explore thepotential systemic risk that existed in Chinese real estate finance and how to restrainthe risk through implementing effective financial regulation in real estate and startswith an overview of relevant theories of real estate financial supervision and systemicrisk of banking. It also analyzed the four basic features of domestic real estatemarket—the rapid growth of real estate development investment scale, the excessivegrowth of the price, the increase of real estate development companies and the numberof homes with years, the expansion of the financing scale of real estate year afteryear—with practice. Due to the severe speculative atmosphere of real estate in recentyears, the price lacks the support of rigid demands, which might lead to the bubbleburst of housing prices.The paper considering the actual situation in our country, we analyzed the macroimpact factors that might trigger systemic risks—housing prices, share prices,exchange rate, interest rate and GDP. By means of Logit transform, VAR analysis andscenario stress testing, we can draw a conclusion that the fluctuation of housing pricesis the most possible factor that may trigger systemic risks of banking against othermacroeconomic factors,proving the strong correlation between market risk of realestate and systemic risk of banking.As a result of this, in order to prevent systemicrisk of banking, we recommend the idea of preventing real estate market risks fromthe aspect of real estate financial supervision. Through using Granger causality test,the feasibility of preventing systemic risks of banking by adjusting real estatesupervision policies such as loan policies has been proved.Finally, we studied on defects of real estate financial supervision of our country.This paper aims at the prevention of systemic risk of banking and put forward therelevant suggestions to improve real estate financial regulatory system in our country.First pay attention to the index of requirements on real estate financial supervision and introducing counter-cyclical supervision measures; Then we should strengtheningthe responsibility of the real estate financial regulation, the need to that supervisorysubjects and the spectrum of duty be clearly defined. Last,building real estatefinancial supervision early warning system and introduing macro stress testing as animportant tool of the real estate financial supervision.