The Study On The Relationship Between Real Estate Price’s Volatility And Financial Stability In China:Index Construction And Impact Analysis

Since the real estate market became mature in twenty-first Century,the development of the housing market is booming.At the present stage,the real estate industry has already played an important role in the national economy of China.More and more financial institutions are going deep into the real estate market because of the high profits.It has advantages and disadvantages,the profit is it can promote the prosperity of the real estate market,the harm is the relationship between the financial system and the real estate industry is more and more closely linked and the financial system is inevitably affected by the real estate industry.China’s real estate market has been overheated.Once the real estate bubble burst,it will have an inestimable negative impact on financial stability.Therefore,it is of great significance to explore the relationship between house price fluctuations and financial stability.Combing domestic and foreign research,summed up the impact of price fluctuations on financial stability mechanism.Based on the financial connotation,combined with the two perspectives of "performance" and "capability",we set up a financial stability index system from macro economy,banking market,stock market and insurance market.We construct the financial stability index on the basis of the generalized maximum entropy model.The maximum entropy is used to solve the optimal weight in the empowerment,avoiding the errors caused by the single weight and improving the reliability of the result The financial stability of China from the first quarter of 2003 to the three quarter of 2017 was analyzed.Using structural vector autoregression model(SVAR),we choose real estate price,real interest rate,stock market earnings ratio,real effective exchange rate index of RMB and financial stability to establish five variable SVAR model,and empirically draw the impact of house price fluctuation on financial stability.Through theoretical and empirical analysis,we conclude that house price volatility can affect financial stability through wealth effect mechanism,Tobin Q mechanism,bank credit mechanism and shadow banking mechanism.The first quarter of 2003 to the three quarter of 2017 China’s financial stability index run stable-Financial stability index in 2003-2006 years showed a rising small-scale fluctuations,2007-2009 years of financial stability index decreased significantly and then increased significantly.Since 2010,the financial stability index in a small range of fluctuations in the state.Through the empirical analysis of SVAR model,in the long run,the real estate price has a negative effect on the financial stability index.The result of variance decomposition shows that the contribution of real estate price to the change of financial stability index is very obvious.The price earnings ratio of the stock market and the real effective exchange rate index of RMB have a significant impact on the house price,and the influence is negative and positive.Finally,it proposes policy recommendations for regulating housing prices and broadening real estate financing channels.