Can housing booms elevate financing costs of financial institutions?

• 成果类型: Article
• 署名作者: Ma, Chao; Zhang, Shuoxun
• 署名单位: Xiamen University; Xiamen University; Sichuan University
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2023.103230
• 发表日期: 2024
• 关键词: House price; Housing boom; Financing costs; Financial institution; BANK; Wealth management products; shadow banking

摘要

We show that house price appreciation elevates financial institutions' financing costs because it can make households invest more in houses and invest less in or require higher returns on other assets. For identification, we employ the unique feature of wealth management products (WMPs, the largest component of China's shadow-banking sector) that the issuing markets are local whereas the markets of some products' underlying assets are national. Stocks, bonds, and deposits do not possess this feature. We find that house price growth raises WMPs' expected returns offered by banks. Household-level analyses further confirm that house price growth reduces households' WMP-investment demands.