Impact of the Real Estate Climate Index on the Non-performing Loan Ratio of Commercial Banks

The 20th National Congress of the Communist Party of China emphasized the imperative to enhance the financial stability safeguard system. Given the pivotal role of commercial banks in China’s financial architecture, effectively managing their non-performing loan ratio proves crucial for sustaining financial and economic stability. This study uses panel data from 2007 to 2022 for empirical analysis. It explores the significant positive link between the real estate climate index and the non - performing loan ratio of commercial banks, showing that the real estate boom worsens systemic credit risk.Heterogeneity analysis reveals this effect manifests more prominently in state-owned commercial banks. Furthermore, capital regulation has a mitigating effect on the positive relationship between the index and the ratio of non-performing loans.These empirical findings highlight the importance of targeted regulatory measures and enhanced real estate market monitoring, providing theoretical and policy insights for optimizing financial risk governance frameworks.