Chinese Real Estate Market Performance: Stock Market Linkages, Liquidity Pressures, and Inflationary Effects

22 Pages Posted: 7 Sep 2012 Last revised: 2 Oct 2012

See all articles by Richard C. K. Burdekin

Richard C. K. Burdekin

Claremont McKenna College - Robert Day School of Economics and Finance

Ran Tao

University of Wisconsin, Whitewater

Multiple version iconThere are 2 versions of this paper

Date Written: August 1, 2012

Abstract

The 2009 surge in bank lending in China was accompanied by allegations of substantial funds being funneled into the nation's stock and property markets. This paper uses 1999-2011 data to examine the possible linkages between lending activity, real estate prices, stock prices and inflation. We find empirical support for housing prices responding to increases in liquidity and lending rates along with evidence of co-determination of stock prices and housing prices. House price inflation also appears to consistently impact the overall inflation rate in China based on both causality testing and VAR estimation.

Keywords: China, real estate, share prices, lending, inflation, Shanghai

JEL Classification: E44, E50

Suggested Citation

Burdekin, Richard C. K. and Tao, Ran, Chinese Real Estate Market Performance: Stock Market Linkages, Liquidity Pressures, and Inflationary Effects (August 1, 2012). Claremont McKenna College Robert Day School of Economics and Finance Research Paper No. 2012-05. Available at SSRN: https://ssrn.com/abstract=2143240 or http://dx.doi.org/10.2139/ssrn.2143240

Richard C. K. Burdekin (Contact Author)

Claremont McKenna College - Robert Day School of Economics and Finance ( email )

500 E. Ninth Street
Claremont, CA 91711
United States

Ran Tao

University of Wisconsin, Whitewater ( email )

800 West Main Street
Whitewater, WI 53190
United States
2624725447 (Phone)

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