An emperical study on the relationship between property prices and bank lending of pearl river delta cities

Abstract

Regarding the Pearl River Delta economic zone as the research object, this paper quantitatively analyzes the short-term interaction and long-term equilibrium relationship between real estate prices and bank credit supply in Guangzhou, Shenzhen, Donguan and Foshan from 1999-2011 by constructing a VAR model and applying multivariate cointegration analysis technology, Granger causality test, impulse response function and variance decomposition. Through the studies, this paper concludes that: the two-way causal relationship exists between property prices and bank lending for the Pearl River Delta area. As for Guangzhou, since a lot of demand for investment, the bank has less impact on property prices. Finally, the paper put forward recommendations from the three aspects of the financing channels for enterprises, product supply structure and policy control.