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Impact of Non-performing Assets and Total ecological footprint on Housing Prices: Panel Evidence from Emerging Economies

Author/s: Himanshu Sekhar Panda, Mantu Kumar Mahalik, Kashif Nesar Rather

Date Published: 30/06/2024

Published in: Volume 29 - 2024 Issue 1 (pages 34 - 56)

Abstract

The residential housing market dynamics in emerging economies are influenced by a variety of factors, along with credit risk and environmental deterioration. In this context, this study empirically investigates the influence of banking sector’s non-performing loans and total ecological footprint on housing prices for a balanced panel of 13 emerging economies between 2010 to 2020. Before estimating the long-run coefficients, the adopted variables have undergone the necessary panel diagnostic tests including cross-sectional dependence, slopeheterogeneity and panel unit root. Additionally, the Westerlund’s cointegration test confirms the existence of a significant long-run equilibrium relationship within the panels. Furthermore, Two-step generalized methods of movement estimation by Arellano-Bover reveals that non-performing assets, ecological footprint, and, real interest rate exert a significant and negative influence on residential housing prices. In contrast, per capita income is positively associated with housing prices, indicating that economic growth ensures a continuous rise in residential property prices in emerging economies. These baseline findings are further confirmed by the PCSE and FGLS estimation techniques. Finally, potential policy implications include addressing credit market uncertainties through appropriate monetary policy and greater thrust for environmental sustainability.

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Keywords

Credit Risk - Ecological Footprint - Emerging Economy - Real Income - Residential Housing Price

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