The 2015 Maastricht-NUS-MIT International Real Estate Finance &; Economics Symposium: Editors’ Introduction to the Special Issue

We use an empirical model of commercial mortgage spreads to examine how tenant diversification impacts credit spreads for mortgages on retail properties. We find that mortgages on properties with a highly diversified tenant base have spreads that are up to 7.1 basis points higher than spreads on mortgages for single-tenant properties, but that mortgages on properties with moderate levels of tenant diversification have spreads that are up to 5.2 basis points lower than mortgages on single-tenant properties. The spread discount for mortgages on properties with moderate levels of tenant diversification disappears when the lease of the property’s largest tenant expires before the loan matures. Despite the spread discount that is given to properties with moderate levels of tenant diversification, we find that the likelihood with which a mortgage goes into default increases as tenant diversification increases.     

The Urban–Rural Gap of Chinese Household Finance

Using data from a large household survey, we investigate the size of China’s urban–rural gap in ownership of bank deposits, risky financial assets, and credit cards. We further examine the factors underlying the gap using decomposition analysis. Compared to their urban counterparts, rural Chinese are much less likely to own a variety of financial products. Both demand-side barriers and supply-side barriers to financial inclusion exist in China. More, we use instrumental variable analysis to address the endogeneity of the local supply of financial service. Above all, our study indicates that a large financial services vacuum in rural areas needs to be filled.