Economics at your fingertips  

Stock and real estate prices in Greece: wealth versus 'credit-price' effect

Panayotis Kapopoulos and Fotios Siokis

Applied Economics Letters, 2005, vol. 12, issue 2, 125-128

Abstract: An attempt is made to clarify the relationship between price fluctuations of two major assets in Greece, real estate and stocks. Two mechanisms have been proposed to interpret this relationship. The first one is well known as 'wealth effect', which claims that households with unanticipated gains in share prices tend to increase the amount of housing. The second one is the credit price effect, which claims that a rise in real estate prices can stimulate economic activity, future profitability of firms and, as a consequence, stock market prices by raising the value of collateral and reducing the cost of borrowing for both firms and households. To test the above transmission, channel tests of Granger causality are employed. Empirical findings are in favour of the wealth effect hypothesis for Athens real estate prices but not for other urban real estate prices. Since real estate at the Athens Metropolitan area could be considered as an investment vehicle, it is reasonable to argue that higher stock prices increase the share of households' portfolios in the stock market and cause a rebalancing of their portfolios by selling stocks and purchasing other assets like houses.

Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25) Track citations by RSS feed

Downloads: (external link) ... 40C6AD35DC6213A474B5 (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:

Ordering information: This journal article can be ordered from

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

Page updated 2019-04-07
Handle: RePEc:taf:apeclt:v:12:y:2005:i:2:p:125-128