THE DIFFERENTIAL EFFECTS OF CREDIT POLICY ON REAL ESTATE PRICES FROM THE PERSPECTIVE OF CLUB CONVERGENCE

Abstract

This study investigates the differential effects of credit policy in the context of real estate price convergence in China. First, we analyze the real estate price convergence of 35 large and medium-sized cities in China using [Formula: see text] convergence and club convergence methods. Subsequently, based on the convergence situation, we use panel models to compare the heterogeneous effects of the credit policy regulation of different clubs. The findings are as follows. (1) In terms of overall convergence, the findings confirm that there is no [Formula: see text] convergence in China’s real estate prices. Prices in each city do not show a trend of convergence to the total mean. (2) There are currently four convergence clubs and one divergence group in terms of regional convergence. Cities with similar initial price levels have similar structural characteristics and tend to converge to their respective local steady states. GDP per capita and population density are the main driving forces for the formation of a real estate price convergence club. (3) We show that the credit scale has a statistically positive impact on the real estate price, and the credit scales of various convergence clubs have different effects on real estate prices. Clubs with more developed real estate and financial markets are more sensitive to changes in credit policy.