Beyond the Collateral Channel : Real Estate Prices and Firm Investment in China
The real estate collateral effect suggests that real estate price growth raises firms’ debt capacity and therefore investment. This study argues that appreciation of real estate prices can push up production costs and thus discourage investment incentives. To examine this hypothesis, we explore a large panel data set of Chinese manufacturing firms and find that local real estate price appreciation has significant and robust negative effects on firm investment. The size of the negative effect is economically large, and a one standard deviation change in real estate prices can explain as much as 17% of the variation in firm investment. Further exploration reveals that such negative effects of real estate prices on investment are stronger for firms in labor intensive sectors
Year of publication: |
[2022]
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Authors: | Wu, Yan ; Heerink, Nico ; Yu, Linhui |
Publisher: |
[S.l.] : SSRN |
Subject: | Immobilienpreis | Real estate price | China | Auslandsinvestition | Foreign investment | Kreditsicherung | Collateral | Immobilienmarkt | Real estate market |
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