The Pre-Sale of Commercial Housing and Commercial Banks'Credit Risk-Taking——Evidence from Chinese Local Banks
Since 2020,debt defaults among Chinese real estate enterprises have become increasingly frequent,with a high number of bankrupcies observed.Some large real estate enterprises have been facing serious liquidity and debt default cri-sis.In this context,the steady development of the real estate market has become an important issue in preventing economic and financial risks in China.Using a sample of 43 Chinese listed local banks from 2009 to 2022,this paper measures the level of real estate pre-sale in city with transaction proportion and transaction threshold,and then empirically examines the impact of the pre-sale of commer-cial housing on banks'credit risk-taking.It is found that the real estate pre-sale transaction significantly increases the default risk of bank loan assets,involving commercial real estate loans,commercial construction loans and residential mortgage loans,which leads to the higher risk-taking of commercial banks.This conclusion still holds after a series of robustness tests.The channel analysis suggests that the real estate pre-sale transaction has negative impacts on the loan assets'quality by increasing the leverage ratio of real estate enterprises,decreasing the turnover ratio of construction enterprises and decreasing the comple-tion ratio of housing.Furthermore,this paper finds that the risk management of banks on commercial real estate loans can effec-tively alleviate the negative impact of the real estate pre-sale transaction on banks'risk-taking.Moreover,the regulatory on pre-sale funds conducted by government and reasonable housing price can also effectively alleviate this negative impact.The conclusions are of great practical value for preventing real estate financial risk.Firstly,commercial banks should at-tach great importance to restraint on risk exposure and asset quality management involving real estate sector.Secondly,the gov-ernment should strengthen the supervision of commercial housing pre-sale funds and ensure the safety of pre-sale funds.Thirdly,the regulator should maintain house price within a reasonable range.
The Pre-Sale of Commercial HousingThe Regulatory on Pre-Sale FundsReal Estate EnterprisesReal Estate Financial Risk
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