Research On The Relationship Between China's Real Estate Leverage And Financial Risk From The Perspective Of System Theor

Since the real estate market reform in the late 20th century,China’s real estate industry has witnessed a spurt of development under the incentive of continuous and loose policies,which has strongly supported the sustained growth of the macro economy.However,the loose policy environment has led to rising prices in the property market and increased macro leverage.According to the Bank for International Settlements,China’s leverage ratio has been rising since the first quarter of 2008 and is edging closer to financial crisis alert levels.This has raised concerns about possible systemic financial risks.According to the Financial Risk Report 2021 released by the Chinese Academy of Social Sciences,the debt risks of some highly leveraged real estate enterprises in China have been exposed rapidly,and the spillover effect of risks in the real estate market has become prominent,and there are even signs of transforming into systemic risks.At present,real estate has become one of the main sources of triggering systemic financial risk.Effectively resolving the systemic financial risks caused by high leverage in the real estate industry has become a hot topic widely concerned by government departments and academic circles.In this field,it involves multi-dimensional market entities such as real estate,financial system,real economy,government and family,and behind the innumerable relationship between these entities is the potential "tentacles" of financial risks that cannot be directly observed.It is of great strategic and practical significance to have a thorough understanding of the formation mechanism,transmission process and function characteristics of this risk,and then to effectively restrain it.Based on the data from 2000 to 2019,this paper first examines the synergistic changes between leverage and systemic financial risk in China’s real estate market using the system coupling method.Secondly,a system dynamics model is constructed.Starting from the characterization of high leverage in the real estate industry,the transmission path of its interaction with systemic financial risks is comprehensively considered.Then,the transmission mechanism of leverage in the real estate industry and systemic financial risks is constructed from a macro perspective,and the transmission path and dynamic mechanism of the impact of leverage in the real estate industry on systemic financial risks are discussed.The results show that:(1)There is an obvious risk resonance between the leverage of China’s real estate industry and the financial system.(2)The risks contained in the high leverage of the real estate industry are mainly transmitted to the entire financial system through the four paths of residents,macro-control,banks and the government.Meanwhile,the trend of systemic financial risks is obviously the same as that of residents,macro risks,banking risks and local government debt risks.(3)The accumulation of systemic financial risks leads to speculation in the real estate market,which in turn leads to the rapid expansion of real estate leverage,and their interaction intensifies risk diffusion.