ANALYSING THE INFLUENCE OF MARKET RISK ON REAL ESTATE TRUST FUNDS (REITS) IN CHINA, THE MEDIATING ROLE OF MONETARY POLICY

Abstract

Purpose: The present study aims to analyse the influence of market risk on Real Estate Trust Funds (REITs) in China, with particular emphasis on the role of monetary policy as an intermediary variable in this correlation. Market risk, which is directly impacted by a multitude of economic factors, affects the performance of real estate investment trusts (REITs) in the industry.

Design/methodology/approach: In the Chinese context, however, the role of monetary policy as a mediator between market risk and REITs remains an understudied topic. The research utilises an all-encompassing examination that integrates market risk indicators, including business cycle risk, interest rate risk and inflation risk, to evaluate the influence of these factors on the returns and valuation of China's REITs. The objective of this study is to determine, via econometric modelling, whether monetary policy, specifically interest rate fluctuations and central bank interventions, acts as a mediator between market risk and REIT performance.

Findings: The anticipated outcomes of this study are poised to enhance comprehension of the complex intricacies inherent in China's real estate sector. They will provide insights into the manner in which monetary policy moderates the impact of market risk on the conduct of REITs. The study's findings may offer valuable implications for policymakers, investors, and market participants who are interested in gaining a more informed understanding of the intricate Chinese real estate investment environment.

Research & Practical implications: The ultimate objective of this research is to make significant contributions to academic literature and facilitate informed decision-making in the field of China real estate investment and finance.

Originality/value: As a summary of essential characteristics, this paper provides researchers with a useful reference guide to previous studies. The research utilises an all-encompassing examination that integrates market risk indicators, including business cycle risk, interest rate risk and inflation risk, to evaluate the influence of these factors on the returns and valuation of China's REITs. Based on the results, the potential avenues for future investigation are provided.

Keywords; Business cycle risk, inflation risk, interest rate risk, monetary policy.