The Debt Shift and Its Consequences: An Analysis of the Effect of Property Lending on House Prices in South Korea
(2025) EKHS21 20251Department of Economic History
- Abstract (Swedish)
- This thesis analyzes the consequences of the debt shift in South Korea and explores whether the expansion of property-related lending causes the rise in residential property prices. By making use of quantitative methods, such as statistical analysis and econometric techniques, the thesis studies the causal relationship between the expansion of property-related loans, which includes both mortgage and real estate loans, and the increase in residential property prices in Korea. It finds that the direction of causation between property-related lending and house prices is unidirectional, with the Granger causality test revealing that the past values of the change in property-related loans are significant in forecasting the rise in house prices... (More)
- This thesis analyzes the consequences of the debt shift in South Korea and explores whether the expansion of property-related lending causes the rise in residential property prices. By making use of quantitative methods, such as statistical analysis and econometric techniques, the thesis studies the causal relationship between the expansion of property-related loans, which includes both mortgage and real estate loans, and the increase in residential property prices in Korea. It finds that the direction of causation between property-related lending and house prices is unidirectional, with the Granger causality test revealing that the past values of the change in property-related loans are significant in forecasting the rise in house prices at the 10 percent level. Statistical analysis has also shown that the rise in household and real estate lending in Korea has led to higher levels of household debt and housing inequality, while crowding out loans to productive manufacturing industries. In line with the theories by Schumpeter, Kindleberger, and Minsky, the findings highlight the relationship between the growth of ‘unproductive’ lending and asset prices, which could have adverse effects on the economy. The findings justify the use of macroprudential regulations and the return of selective credit controls to monitor and restrict the quantity of property-related loans to preserve financial stability in the future. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/student-papers/record/9206173
- author
- Eken, Joris Adrianus LU
- supervisor
- organization
- course
- EKHS21 20251
- year
- 2025
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Debt shift, property-related lending, household debt, housing inequality, house prices, South Korea
- language
- English
- id
- 9206173
- date added to LUP
- 2026-09-07 13:48:53
- date last changed
- 2026-09-07 13:48:53
@misc{9206173,
abstract = {{This thesis analyzes the consequences of the debt shift in South Korea and explores whether the expansion of property-related lending causes the rise in residential property prices. By making use of quantitative methods, such as statistical analysis and econometric techniques, the thesis studies the causal relationship between the expansion of property-related loans, which includes both mortgage and real estate loans, and the increase in residential property prices in Korea. It finds that the direction of causation between property-related lending and house prices is unidirectional, with the Granger causality test revealing that the past values of the change in property-related loans are significant in forecasting the rise in house prices at the 10 percent level. Statistical analysis has also shown that the rise in household and real estate lending in Korea has led to higher levels of household debt and housing inequality, while crowding out loans to productive manufacturing industries. In line with the theories by Schumpeter, Kindleberger, and Minsky, the findings highlight the relationship between the growth of ‘unproductive’ lending and asset prices, which could have adverse effects on the economy. The findings justify the use of macroprudential regulations and the return of selective credit controls to monitor and restrict the quantity of property-related loans to preserve financial stability in the future.}},
author = {{Eken, Joris Adrianus}},
language = {{eng}},
note = {{Student Paper}},
title = {{The Debt Shift and Its Consequences: An Analysis of the Effect of Property Lending on House Prices in South Korea}},
year = {{2025}},
}