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Housing price and enterprise financing: does mortgage effect exist?

Housing price and enterprise financing: does mortgage effect exist? The purpose of this paper is to explore the influence of the rise in housing prices on enterprise financing and also the sustainability and heterogeneity of this effect.Design/methodology/approachEmpirical test, panel data, fixed-effect model, IV and 2SLS were used in this paper.FindingsThe empirical results indicate that the mortgage effect does exist, and the authors further analyze the heterogeneity of this effect by dividing the sample based on the degree of financial development and property rights; the empirical results reveal that the mortgage effect is significantly higher in places with the high level of financial development. Besides, compared to the SOE enterprise, the mortgage effect has more influence on non-SOE companies.Research limitations/implicationsThe results indicate that the mortgage effect should be considered when regulating housing market, and in order to improve the financing capability of company, its profitability and financial market efficiency should be emphasized.Originality/valueThis paper not only confirms the existence of the mortgage effect, but also explores its sustainability and heterogeneity, which reveals the risk and bubble in the effect of house market on enterprise financing, and enlightens how to promote financing ability of company. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png China Finance Review International Emerald Publishing

Housing price and enterprise financing: does mortgage effect exist?

Li, Shujing; Gao, Nan
China Finance Review International , Volume 9 (1): 16 – Feb 20, 2019
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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2044-1398
DOI
10.1108/cfri-03-2018-0026
Publisher site
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Abstract

The purpose of this paper is to explore the influence of the rise in housing prices on enterprise financing and also the sustainability and heterogeneity of this effect.Design/methodology/approachEmpirical test, panel data, fixed-effect model, IV and 2SLS were used in this paper.FindingsThe empirical results indicate that the mortgage effect does exist, and the authors further analyze the heterogeneity of this effect by dividing the sample based on the degree of financial development and property rights; the empirical results reveal that the mortgage effect is significantly higher in places with the high level of financial development. Besides, compared to the SOE enterprise, the mortgage effect has more influence on non-SOE companies.Research limitations/implicationsThe results indicate that the mortgage effect should be considered when regulating housing market, and in order to improve the financing capability of company, its profitability and financial market efficiency should be emphasized.Originality/valueThis paper not only confirms the existence of the mortgage effect, but also explores its sustainability and heterogeneity, which reveals the risk and bubble in the effect of house market on enterprise financing, and enlightens how to promote financing ability of company.

Journal

China Finance Review International – Emerald Publishing

Published: Feb 20, 2019

Keywords: Sustainability; Enterprise financing; Housing price; Mortgage effect

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