Date of Award

2019

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Yu, Sherry

Area of Concentration

Economics

Abstract

This thesis examines the critical role of shadow banking system in driving China’s housing price growth. Utilizing components from the Total Social Financing instrument used by the Chinese government to measure shadow banking activities, this thesis empirically estimates their effects on the rising housing prices. A panel data of 35 cities and provincial-level control variables is constructed and estimated using the Arellano- Bover/Bluendell-Bond Dynamic Ordinary Least Square method. Results show that shadow banking activities are significant in driving China’s housing price growth. Lastly, policy recommendations are provided to address systemic risk and banking reform in China.

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