International Journal of Mathematical, Engineering and Management Sciences (Dec 2020)

The Real Estate Market and Financial Stability

  • My-Linh Thi Nguyen,
  • Toan Ngoc Bui

DOI
https://doi.org/10.33889/IJMEMS.2020.5.6.094
Journal volume & issue
Vol. 5, no. 6
pp. 1270 – 1283

Abstract

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This paper investigates the relationship between the real estate market (REM) and financial stability in Vietnam. Financial stability is measured using stock market volatility. The research is performed in Vietnam, a developing country whose stock and real estate markets are considered to be nascent, so the data series is very short. To solve this problem, the autoregressive distributed lag (ARDL) approach, which generates more valid results than its counterparts, is adopted. Furthermore, the ARDL approach is appropriate for a model with non-stationary data series and especially allows the analysis of the impact between data series in the short run and the long run. The results reveal the positive relationship between the real estate market and stock market volatility. However, this correlation only exists in the short run, which is a difference between Vietnam and developed countries. The paper also obtains an unprecedented finding confirming that the global financial crisis exerted a negative impact on the REM in Vietnam in the short run and the long run.

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