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Non-performing loans and housing prices in China

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  • Wan, Junmin

Abstract

First, housing bubbles were found in major cities between 2004 and 2015 by a bubble test. Second, by panel estimations on banks during 2007–2015, housing prices were found to have significantly negative impact on non-performing loans (NPLs). Third, by panel estimations on 19 industrial sectors during 2005–2015, housing prices were also found to have significantly negative impact on NPLs. Fourth, housing prices Grangers caused NPLs but the opposite was rejected. Finally, “restriction of speculative housing purchase” used as instruments for housing prices had significantly raised NPLs due to raising vacant houses, decreasing housing investment and profit of housing-related firms.

Suggested Citation

  • Wan, Junmin, 2018. "Non-performing loans and housing prices in China," International Review of Economics & Finance, Elsevier, vol. 57(C), pages 26-42.
    • Handle: RePEc:eee:reveco:v:57:y:2018:i:c:p:26-42
    DOI: 10.1016/j.iref.2018.02.011
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    2. Karlo Kauko, 2021. "The Vanishing Interest Income of Chinese Banks," Asian Economic Papers, MIT Press, vol. 20(3), pages 94-113, Fall.
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    7. Sakuragawa, Masaya & Tobe, Satoshi & Zhou, Mengyuan, 2021. "Chinese housing market and bank credit," Journal of Asian Economics, Elsevier, vol. 76(C).
    8. Tsaubin Chen & Chiang Ku Fan, 2019. "Non-performing Loans and Housing Prices in Taiwan," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(6), pages 1-4.
    9. Mariagrazia Fallanca & Antonio Fabio Forgione & Edoardo Otranto, 2021. "Do the Determinants of Non-Performing Loans Have a Different Effect over Time? A Conditional Correlation Approach," JRFM, MDPI, vol. 14(1), pages 1-15, January.
    10. Wan, Junmin & Qiu, Qiqi, 2023. "Industrial investments and housing prices in China," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 832-852.
    11. Wan, Junmin, 2024. "Bubble occurrence and landing," Journal of Financial Stability, Elsevier, vol. 70(C).
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    More about this item

    Keywords

    Non-performing loans; Housing bubble; Restriction of speculative housing purchase; Comprehensive expected loss ratio; Bank;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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