Reach On Real Estate Industry Risks And Spillover Effects To Banking Industry

With people's disposable income accumulation gradually,benefiting from the economic growth of China,coinciding with the tide of urbanization at the same time,the housing demand is rising day by day,real estate development investment is booming,housing sales price and house price income ratio is increasing year by year.China's real estate market is appearing a phenomenon of irrational exuberance and has accumulated some risks.And most of the funds of the real estate supply and demand are from bank credit,so banks will have a high risk exposure in the real estate portfolio directly or indirectly,and the real estate industry risks are likely to affect the bank earnings of real estate loans and real estate mortgage.Therefore,the real estate industry risks may lead to the accumulation of banks risks and reduce the banking industry's earnings.With the risk of the real estate industry gradually accumulating with rising house prices,the risk of the real estate industry and its impact on financial institutions have aroused widespread concerns,but given that there is no literature has yet researched how it all affects the bank earnings from the overall risks of the real estate industry,the article creatively uses the combination of qualitative analysis and quantitative analysis to analyze and measure the real estate industry risks and its impact on bank returns.In this thesis,on the basis of the current situation of the real estate industry and the bank development,we give the qualitative analysis of the relationship between them and infer that the real estate industry risks have an impact on bank returns;on the basis of reading Chinese and foreign literatures,it is found that the contingent claims analysis method is suitable for measuring the risk of China's real estate industry and the method can be improved to the final default distance,which can accurately measure the risk of China's real estate industry at this stage.The use of the improved contingent claims analysis method to measure the risk of the real estate industry in China is the another innovation:based on reading literatures and the foregoing analysis,we can come to a conclusion that the implicit costs,operating costs,loan sizes,and management quality are the main factors that affect the bank's revenues.And these factors and the default distance,measured by the contingent equity analysis method,can be used as explanatory variables of the bank's income,and then the VAR model can be established.Finally,the impact of real estate industry risk on bank returns can be explored by Granger Causality Test.In the empirical part of the article,we choose 97 listed real estate companies in our country as the research objects,and measure the industry risks of the real estate industry through the default distance.At the same time,we select 16 listed banks as the research objects and use the implicit costs,operating costs,loan sizes,management qualities and real estate default distance as explanatory variables to establish a model and study its impact of real estate industry on bank returns from 41 st quarter of the first quarter of2007 to the third quarter of 2017.Finally,we can do the conclusions as follows: Under the control of the government,the risks of the real estate industry gradually return to a normal value from a high value.The default distance affects the bank earnings,and the real estate industry risk has influence to the bank earnings and risk.