Government Real Estate Interventions and the Stock Market
61 Pages Posted: 28 Apr 2020 Last revised: 24 Feb 2021
Date Written: April 4, 2020
We study the spillover of government interventions in the real estate market to the stock market. We find that the more active mutual funds decreased ownership in equities with no short-term reversal. Furthermore, they increased ownership in the finance sector stocks without significant changes to their real estate equity holdings. The interventions affecting the riskiness of the finance sector stocks triggered a larger trading response than the ones focused on the real estate sector stocks’ cash flows. Overall, the spillover of the housing market shocks to the stock market seems to be materialized mostly through the discount rate channel.
Keywords: Government Externality, Real Estate, Institutional Investors
JEL Classification: G23, G14, G18
Suggested Citation: Suggested Citation