The Effects Of Macroprudential Policy On Housing Market: Evidence From 30 Provinces In China
The housing market plays a significant role in Chinese economic growth, especially housing-related consumption,
investment and tax revenue. However, a house price (boom or bust) will affect the stability and the safety of the financial
system. In order to manage the potential risks from the housing market, macro prudential policy has been popularly used in
economies all over the world in recent years as both a regulatory and supervisory instrument. Additionally, China also
implemented macro prudential policy to maintain the soundness of the financial system and the housing market. The purpose
of this research is to investigate whether the macro prudential policy enacted by the government is effective in managing
housing prices in 30 provinces within China since 2006 via the panel fixed-effects model. The results showed that most of
macro prudential instruments are effective. This can help control and contain increases in house prices in both newly
constructed housing markets, as well as second-hand housing markets. It also found that the reserve requirement ratio is the
most effective instrument.
Index Terms- China, Housing market, Macro prudential policy, Policy effectiveness.