Shadow Bank, Risk-Taking, and Real Estate Financing: Evidence from the Online Loan Market

Xiaoying Deng (), Chong Liu () and Seow Eng Ong ()
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Xiaoying Deng: Singapore Management University
Chong Liu: Shanghai University of Finance and Economics
Seow Eng Ong: National University of Singapore

The Journal of Real Estate Finance and Economics, 2024, vol. 68, issue 1, No 1, 27 pages

Abstract: Abstract This paper examines whether and how individual risk-taking behavior affects real estate financing through shadow banks. Using the loan data from an online platform in China, we show that riskier households tend to employ online loans to meet the increasing down-payment in their home purchase. Individual investors are likely to fund riskier real estate loans with higher expected returns. Real estate loans experience higher ex-post default rates than other types of loans. The effect is more pronounced during the period of credit constraints.

Keywords: Online Lending; Risk Taking; Real Estate Loans; House Purchase Restrictions (search for similar items in EconPapers)
JEL-codes: G21 G28 R21 R30 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11146-022-09936-7

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