Impacts of monetary policies on the real estate bubble in Hanoi, Vietnam

  • Received December 9, 2022;
    Accepted January 4, 2023;
    Published March 20, 2023
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/imfi.20(1).2023.20
  • Article Info
    Volume 20 2023, Issue #1, pp. 228-237
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The development of the real estate market always goes hand in hand with the fluctuation of the economy. In recent years, this market has experienced many recessions and «freezes» associated with the appearance of a real estate bubble. To approach this issue, this paper studies and gives an overview of the real estate bubble and the impact of monetary policies on the real estate bubble in Vietnam. This paper’s purpose is to identify and measure the influence of monetary policies, including interest rates, credit and money supply, on the real estate bubble in Ha Noi. The vector autoregression model (VAR) is used to test the interaction of the variables in the model. Dickey-Fuller test (DF) is applied to determine the stationarity of the variables, while the Akaike information criterion (AIC), Likelihood Ratio (LR), Final prediction error (FPE), Hannan-Quinn information criterion (HQ) and Schwarz criterion (SC) are used to find optimal lag of the model; then Granger causality test is utilized to determine the two-way correlation between variables. The results showed that the real estate bubble reacted quickly to shocks from macroeconomic factors representing the monetary policy, consisting of interbank interest rates, credit growth, and money supply growth. Thus, it is concluded that monetary policy is not only the cause of formation, but also one of the effective solutions to deflate the real estate bubble.

Acknowledgment
This research is funded by Vietnam Ministry of Education and Training (MOET) under grant number [B2022-NTH-03].

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    • Figure 1. Impulse response results of SPPI to various variables
    • Table 1. DF test results
    • Table 2. Granger causality test results
    • Table 3. VAR model estimation results
    • Conceptualization
      Phuong Lan Le, Thu Uyen Nguyen, Thi Thanh Van Pham, Thi Huong Pham
    • Investigation
      Phuong Lan Le, Thu Uyen Nguyen, Thi Thanh Van Pham, Thi Huong Pham, Sy Bin Nguyen
    • Methodology
      Phuong Lan Le, Thu Uyen Nguyen, Thi Thanh Van Pham, Thi Huong Pham, Sy Bin Nguyen
    • Project administration
      Phuong Lan Le, Thu Uyen Nguyen
    • Supervision
      Phuong Lan Le
    • Validation
      Phuong Lan Le, Thu Uyen Nguyen, Thi Thanh Van Pham
    • Writing – original draft
      Phuong Lan Le, Thu Uyen Nguyen, Thi Thanh Van Pham, Thi Huong Pham, Sy Bin Nguyen
    • Writing – review & editing
      Phuong Lan Le
    • Formal Analysis
      Thu Uyen Nguyen, Thi Thanh Van Pham, Thi Huong Pham, Sy Bin Nguyen
    • Visualization
      Thu Uyen Nguyen, Sy Bin Nguyen
    • Data curation
      Thi Thanh Van Pham, Thi Huong Pham, Sy Bin Nguyen