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This dissertation, An Investigation of Regulatory Changes and Real Estate Credit in Episodes of Financial Instability by Hsiang-Ying, Wu, 吳香穎, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: Abstract of Thesis Entitled An Investigation of Regulatory Changes and Real Estate Credit in Episodes of Financial Instability Submitted by Wu Hsiang Ying For the degree of Master of Philosophy At the University of Hong Kong In June 2006 The deregulation and internationalization of domestic banking industries in many countries since the 1970s led to significant episodes of financial instability in many domestic banking systems, including Sweden, Australia, the USA, and recently, the Asian Financial Crisis of 1997-1998. These episodes have stimulated many researchers and policymakers alike to search for reasons for such episodes. One of the main issues pointed out by many is the problem of asset quality on banks' balance sheets. This study goes further to examine the reason why banks take on excessive risks and the role that real estate plays in such behavior. Information asymmetry is seen as one important explanation for banks' over-reliance on real estate as collateral for many loans. As will be shown in the case studies, change in banks' lending behavior is often triggered by a series of deregulation or regulatory changes of financial systems that brings about intensified competition. This often leads to aggressive asset growth and often is accompanied by deteriorating credit criteria. By looking at the case studies of Sweden, Japan, Mexico and Thailand, this study analyses the relationship between deregulation of financial intermediaries and subsequent behavior exhibited by banks in these markets and concentrates in particular on mechanisms that lead to an expansion of credit to real estate as an asset class. The study also analyses how banks' collective decisions destabilize banking systems under these circumstances. 3 DOI: 10.5353/th_b3663211 Subjects: Mortgage loansInvestment banking - DeregulationFinancial crises

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