All That Glitters is Not Gold: Examining the Negative Impact of Real Estate Value on Companies' Market Competitiveness

Fangzhi Liang (), Gary Gang Tian (), Zhihua Wei () and Aimin Zeng ()
Additional contact information
Fangzhi Liang: Xiamen University
Gary Gang Tian: Macquarie University
Zhihua Wei: Xiamen University
Aimin Zeng: Zhejiang Gongshang University

The Journal of Real Estate Finance and Economics, 2025, vol. 71, issue 4, No 6, 722-766

Abstract: Abstract This paper introduces and investigates the hypothesis that the crowding-out effect surpasses the collateral effect, suggesting that an increase in the value of real estate holdings by companies hinders their competitiveness in the product market within emerging economies. Through our analysis, we elucidate the underlying mechanism, demonstrating that although Chinese listed companies benefit from their real estate holdings in terms of debt financing, these financial resources are predominantly reinvested in real estate projects rather than other productive endeavors. This effect is particularly pronounced when companies face significant financial constraints, operate in highly monopolistic industries, and are situated in regions where local governments heavily rely on land finance and face substantial pressure for GDP growth. By shedding light on the adverse implications of companies' real estate holdings and uncovering the factors contributing to the crowding-out effect, our research underscores the importance of enhanced regulations in the real estate markets of developing nations during the periods of irrational housing booms.

Keywords: Real estate holding value; Product market competitiveness; Crowding-out effect; Chinese real estate market crisis (search for similar items in EconPapers)
JEL-codes: D21 G32 R32 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11146-024-09981-4 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jrefec:v:71:y:2025:i:4:d:10.1007_s11146-024-09981-4

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11146/PS2

DOI: 10.1007/s11146-024-09981-4

Access Statistics for this article

The Journal of Real Estate Finance and Economics is currently edited by Steven R. Grenadier, James B. Kau and C.F. Sirmans

More articles in The Journal of Real Estate Finance and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().