Effects of Bank Lending on Urban Housing Prices for Sustainable Development: A Panel Analysis of Chinese Cities

Yongsheng Jiang, Dong Zhao, Andrew Sanderford and Jing Du
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Yongsheng Jiang: School of Management Engineering, Shandong Jianzhu University, Jinan 250101, China
Dong Zhao: School of Planning, Design and Construction, Michigan State University, East Lansing, MI 48824, USA
Andrew Sanderford: College of Architecture, Planning and Landscape Architecture, University of Arizona, Tucson, AZ 85721, USA
Jing Du: Department of Construction Science, Texas A&M University, College Station, TX 77843, USA

Sustainability, 2018, vol. 10, issue 3, 1-16

Abstract: Stable home prices are critical to a healthy housing market and sustainable development. Home prices in many Chinese cities have increased dramatically in past decades. The China’s central bank uses two primary monetary controls on overheated housing prices: the bank lending supply and lending rate. However, little to no evidence informs whether the nation-level bank lending controls are effective at the city level. Unlike extant studies that only focus on nation-level effects of such controls, this research analyzes long-run effects on housing prices at the national, regional, and city levels. The authors perform cross-sectional time-series regressions on empirical data from 35 major Chinese cities for the period 2003 to 2015. Results confirm that controlling lending rates is effective as a long-term measure at the national, regional, and city levels, whereas controlling the lending supply is effective as a short-term measure for many cities. Results also reveal that housing prices cause lending supply changes for many regions in a long run and indicate that credit policy often lags in response to housing price changes. Findings show that the effectiveness of bank lending largely varies at the city level, suggesting city-tailed bank lending rather than the centralized controls at the national level.

Keywords: sustainable housing; urban development; affordability; real estate (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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