The Research Of The Interaction Of Bank Credit And Real Estate Prices

Real estate prices and bank credit is closely related to each other,which isdetermined by real estate’s characters such as long construction period and focusedfunds.At present, China ’s real estate finance market is still dominated by a system ofcredit.Commercial credit and policy-based lending occupies a large proportion in thecredit structure.Among the proportion of commercial credit, real estate credit is morethan80%. In the composition of the commercial credit, bank credit has exceeded thelevel of95%. As a pillar industry, the real estate is very important to people’s life.Itslevel of development is closely related to social harmony and stability.In these days,ithas been the government vital goals to achieve multi-level housing demand.Real estate has multiple properties,it is taken as consumer goods and investmentgoods for the purpose and it is also regarded as collateral during the purchase process.Real estate prices affect businesses and residents to make decisions by broadenedwealth effect and substitution effect and further affect the supply and demand for realestate credit markets. Meanwhile, the real estate credit and real estate prices arecounterproductive, and its impact is generally positive.In such financial mode, bank credit affects output and macroeconomicfluctuations indirectly via influencing real estate prices. At the background of realestate becoming a pillar industry in China, the effect is rapid and intense. Once asmaller external shock happens, it will exacerbate volatility of the real economy andthe virtual economy by the linkage of these two variables, making bank credit riskconcentration.As a result,it will affect the social stability and harmony seriously. Inrecent years,although a variety of supervision are carried out, China’s real estateprices continue to rise.In the expectation of real estate rising, bubble takes shape. Withincreasing calls for reform of real estate, it is necessary to conduct a more systematicpsychological theory and empirical analysis about real estate market, thus avoidingthe risk spreading rapid and deepened. Firstly,the paper gives qualitative analysis to the price of real estate and realestate credit,in order to research path and mechanism of interaction between these twovariablies.Then a static model of behavioral finance and construct utility functions isused between the two variables and the model explained the impact of real estatecredit on real estate prices. Finally the vector autoregression model is used to doempirical research, the findings show that: in the long run, pre-real estate loans andreal estate prices don’t have obvious negative impact on the current real estate prices.The current consumer expectations index of real estate prices has a positive impact,and its role is greater than the extent of the role of the degree of pre-real estate creditand real estate prices;in the short run, before four consecutive real estate loans willimpact the current real estate prices, the impact of the previous period is larger.Consumer expectations index caused the greatest impact on the current real estateprices.