Banks’ lending to public and private sectors and house prices: does bank ownership matter?

Hassan F. Gholipour, Elias Oikarinen, Reza Tajaddini

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Purpose
The purpose of this study is to examine the interaction between banks’ lending to public and private sectors and house prices using data from the Iranian banking system including, commercial government-owned banks (CGBs), specialized government-owned banks and private banks.

Design/methodology/approach
The authors use quarterly data from the second quarter of 2004 to the first quarter of 2016 and apply structural vector autoregression models.

Findings
The results show that: a positive shock to the loan supply to the private sector triggers a positive response from house prices; a positive shock to the loan supply to the public sector does not trigger a positive response from house prices; house price appreciations contribute significantly to banks’ lending to the public sector but not lending to the private sector; each loan supply by three different types of banks influences house prices positively; and CGBs’ lending to the private sector does not respond to house price shocks.

Originality/value
Although the relationship between banks’ lending and house prices is well-established in the literature, existing studies have not yet examined whether bank ownership matters for the link between banks’ lending and house prices.
Original languageEnglish
Number of pages23
JournalINTERNATIONAL JOURNAL OF HOUSING MARKETS AND ANALYSIS
DOIs
Publication statusE-pub ahead of print - 22 Jun 2019
MoE publication typeA1 Journal article-refereed

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