An Empirical Study On The Impact Of Price Fluctuations On The Regional Financial Stability

Since the reform and opening up,China’s economy has entered a rapid development period.In this economic environment,the development of China’s real estate market is also very rapid.The rapid development of the real estate market requires a large amount of money,which can not be separated from the financial institutions credit support,and this relationship makes the financial market funds into the real estate market,the real estate market and the financial markets have a close link.Therefore,when the real estate price fluctuations,it is bound to have an inevitable impact on regional financial stability.After reading a lot of literatures,this paper takes Nanjing as example,select the relevant time series data of 2005-2014,analyzes the supply and demand of real estate price theory,price theory and the factors that can have an impact on real estate prices;In terms of regional financial stability,deflation theory,theory of financial risk and monetarist theory provides theoretical support to this paper.In these theories,this paper will construct an empirical analysis of regional financial stability index system and vector error correction model combined,finally according to the results of the analysis to find the impact of Nanjing real estate price fluctuation on regional financial stability,drew the following conclusions:From the perspective of the real estate price fluctuations,according to the existing data,The real estate prices of Nanjing rose year by year since 2005,the real estate market is booming,the market in short supply,the sales area gradually increased.Around 2008,there is a small decline in the property market,this is because the impact of the global financial crisis.But because the western economic system and the economic system of our country is different,the impact of the global financial crisis is smaller,on China’s macro-control,coupled with the government promptly and effectively,make the economy of our country caused slight fluctuations.In the government’s timely and effective macro-control,China’s economy has only a slight fluctuations.Overall,the real estate prices of Nanjing are in a good growth environment.From the perspective of regional financial stability,as a whole,from 2005 to 2014,the regional financial stability index of Nanjing is showing an upward trend,which suggesting that regional finance of Nanjing is in a stable state.According to weights of the macro-economic system,the asset-liability ratio of the business sector and per capita disposable income in the households sector,it can be seen that these three indicators make the most significant influence on financial stability in the region.In these 10 years,the macro economic system of Nanjing is in stable condition,and the macro economy is in good development.Financial institutions in Nanjing have been expanding,premium income increased year by year,the insurance industry continues to develop rapidly,the corporate sector’s turnover healthy,the assets and liabilities is in good balance,disposable income per capita has also achieved steady growth.This situation reflects that the regional financial is more and more stable in Nanjing.The results of empirical analysis show that the real estate price fluctuations not only have impact on the regional financial stability in the current period,but will be lagging behind 2 period.This means that during the lag 2 period,Real estate price fluctuations can lead to the emergence of regional financial instability,the greater the volatility of real estate prices,the lower the regional financial stability,the smaller the volatility,the higher the regional financial stability.Besides,the influence degree of real estate price fluctuation on the regional financial stability changes with the lag time,the lag time is longer,the effect of real estate price fluctuation on regional financial stability is smaller.Finally,this paper puts forward some suggestions from the macro control,the diversification of financing avenues,the standardization of commercial banks and enterprises,and the stability of the household sector.