Property Prices and Bank Lending: Some Evidence from China's Regional Financial Centres

Abstract

Abstract By exemplifying the cases of China's twenty financial cities, this paper tries to identify the linkages between property prices and bank lending in China's regional financial centers and finds that long-run causality appears between property prices and bank lending for each financial center. Time series techniques and dynamic panel data model are used in this paper. Through analysis, this paper gives the conclusion that bank lending plays an important role in pushing up property prices. Property price indeed follows a dynamic process and the property prices of Beijing, Shanghai and Shenzhen change in a more stable way. In detail, people of the three financial centers in China Beijing, Shanghai and Shenzhen pay more attention to bank lending when buying their houses.