Analysis of Bankruptcy Factors in Presale Projects and Their Policy Implications

HyuckShin Kwon, DooWon Bang and SeoungUk Han

Emerging Markets Finance and Trade, 2024, vol. 60, issue 13, 3007-3025

Abstract: In this study, we suggest policy implications for managing the risk of bankruptcy in housing presale projects in Korea. In conclusion, we find that the competing risk Cox proportional hazard model (PHM) is the best model for explaining the bankruptcy factors of projects and the banks that lend construction funds and policy authorities need to manage presale projects by considering bankruptcy factors (the initial presale rate, regional factor, the credit rating of the developers, the housing common factor). This study differs from previous studies in that it uses the competing risk Cox proportional hazard model and single-index model methodologies for empirical analysis, distinguishes the causes of business failure as default and the default of repurchase agreement options that are similar to actual defaults, and suggests policy implications based on the analysis.

Date: 2024
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DOI: 10.1080/1540496X.2024.2332399

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