THE IMPACT OF MONETARY POLICY ON THE CONNECTION BETWEEN MARKET RISK AND REAL ESTATE INVESTMENT TRUSTS (REITS) IN THE CHINESE CONTEXT

Abstract

Purpose: This study examines the influence of market risk on China's Real Estate Trust Funds (REITs), specifically exploring the role of monetary policy as an intermediate variable in this association. The performance of REITs in the real estate industry is directly affected by market risk, which is impacted by a range of economic variables.

Design/methodology/approach: Nevertheless, the impact of monetary policy on the connection between market risk and Real Estate Investment Trusts (REITs) in the Chinese context has not been thoroughly examined. The research utilises a thorough examination that integrates metrics of market risk, such as security price risk and real estate price risk, and evaluates their influence on the returns and value of China's REITs. The study uses econometric modelling to analyse the mediating impact of monetary policy, namely changes in interest rates and interventions by central banks, on the correlation between market risk and the performance of Real Estate Investment Trusts (REITs).

Findings: The results of this study are anticipated to enhance our comprehension of the complex dynamics inside China's real estate market, elucidating the impact of market risk on the behaviour of REITs and the function of monetary policy in mitigating these impacts. The findings of this research may provide valuable guidance for investors, policymakers, and market players who are looking for a better understanding of the intricacies of the Chinese real estate investment market.

Research & Practical implications: The primary objective of the study is to make significant contributions to academic literature and practical decision-making in the field of real estate financing and investment in China.

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; security price risk, monetary policy, real estate price risk.