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Impact of mortgage repayments withdrawal threat on banking stocks: An event study in China

In July 2022, several media outlets reported news of Chinese homebuyers refusing to repay mortgages on unfinished buildings. It is uncertain whether this event would have had an impact on bank returns as, there is not an overwhelming amount of literature available. Therefore, we collected data from...

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Main Authors: He, Junlin, Lau, Wei-Theng, Yu, Lei, Zhu, Yunchen
Format: Article
Published: SAGE Publications 2023
Online Access:http://psasir.upm.edu.my/id/eprint/108307/
https://journals.sagepub.com/doi/10.1177/09721509231157508
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spelling my.upm.eprints.1083072024-06-13T02:39:14Z http://psasir.upm.edu.my/id/eprint/108307/ Impact of mortgage repayments withdrawal threat on banking stocks: An event study in China He, Junlin Lau, Wei-Theng Yu, Lei Zhu, Yunchen In July 2022, several media outlets reported news of Chinese homebuyers refusing to repay mortgages on unfinished buildings. It is uncertain whether this event would have had an impact on bank returns as, there is not an overwhelming amount of literature available. Therefore, we collected data from 43 A-share listed banks and the CSI 300 Index for 191 trading days. Based on the Theory of the Efficient Market Hypothesis, we used an Event Study Method to explore whether the returns of bank stocks were affected by this event. By calculating the Average Abnormal Returns and Cumulative Abnormal Returns of the samples, we found that although the withdrawal of mortgage repayments by homebuyers had a short-term significant negative impact on the returns of banks’ stocks, it was quickly absorbed by the market. We consider this may be related to the risk announcements issued by some banks. Additionally, we have provided recommendations for homebuyers, banks, and relevant institutions based on our findings. SAGE Publications 2023 Article PeerReviewed He, Junlin and Lau, Wei-Theng and Yu, Lei and Zhu, Yunchen (2023) Impact of mortgage repayments withdrawal threat on banking stocks: An event study in China. Global Business Review. ISSN 0972-1509; ESSN: 0973-0664 https://journals.sagepub.com/doi/10.1177/09721509231157508 10.1177/09721509231157508
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
description In July 2022, several media outlets reported news of Chinese homebuyers refusing to repay mortgages on unfinished buildings. It is uncertain whether this event would have had an impact on bank returns as, there is not an overwhelming amount of literature available. Therefore, we collected data from 43 A-share listed banks and the CSI 300 Index for 191 trading days. Based on the Theory of the Efficient Market Hypothesis, we used an Event Study Method to explore whether the returns of bank stocks were affected by this event. By calculating the Average Abnormal Returns and Cumulative Abnormal Returns of the samples, we found that although the withdrawal of mortgage repayments by homebuyers had a short-term significant negative impact on the returns of banks’ stocks, it was quickly absorbed by the market. We consider this may be related to the risk announcements issued by some banks. Additionally, we have provided recommendations for homebuyers, banks, and relevant institutions based on our findings.
format Article
author He, Junlin
Lau, Wei-Theng
Yu, Lei
Zhu, Yunchen
spellingShingle He, Junlin
Lau, Wei-Theng
Yu, Lei
Zhu, Yunchen
Impact of mortgage repayments withdrawal threat on banking stocks: An event study in China
author_facet He, Junlin
Lau, Wei-Theng
Yu, Lei
Zhu, Yunchen
author_sort He, Junlin
title Impact of mortgage repayments withdrawal threat on banking stocks: An event study in China
title_short Impact of mortgage repayments withdrawal threat on banking stocks: An event study in China
title_full Impact of mortgage repayments withdrawal threat on banking stocks: An event study in China
title_fullStr Impact of mortgage repayments withdrawal threat on banking stocks: An event study in China
title_full_unstemmed Impact of mortgage repayments withdrawal threat on banking stocks: An event study in China
title_sort impact of mortgage repayments withdrawal threat on banking stocks: an event study in china
publisher SAGE Publications
publishDate 2023
url http://psasir.upm.edu.my/id/eprint/108307/
https://journals.sagepub.com/doi/10.1177/09721509231157508
_version_ 1802978793414983680
score 13.211869

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