The Asymmetric Mechanism of Housing Price Impact on Financial Stability

This paper analyzes the impact of housing price impact on financial stability based on FAVAR model from a full view. Results show that the rising and falling of housing price play different impacts,and the mechanism is asymmetric. Specifically: the rising of housing price weakens financial vulnerability in short term,and strengthens the financial stability in long term,risk conduction is not obvious. When housing price fall down,financial stability was deteriorated strongly,risk grow rapidly,and the channel through short- term interest rate to monetary market conducts significantly. Whether housing price rising or falling,stock market always relates to the housing price,but the falling of housing price impact more intensely. Therefore,China needs to supervise finance and prevent risk by using a steady coordination and targeted form.