A study on the mediating effect of residential loans on total real estate loans of banks in India
| Date | 05 August 2019 |
| Pages | 455-469 |
| DOI | https://doi.org/10.1108/JPIF-03-2019-0034 |
| Published date | 05 August 2019 |
| Author | Tanu Aggarwal,Priya Solomon |
| Subject Matter | Property management & built environment,Real estate & property,Property valuation & finance |
A study on the mediating effect of
residential loans on total real
estate loans of banks in India
Tanu Aggarwal and Priya Solomon
Amity School of Business, Amity University Noida, Noida, India
Abstract
Purpose –The purpose of this paper is to examine the impact of residential and commercial loans on
total real estate sector loans by using partial least square–structured equation modelling (PL–SEM) method.
The residential loans as a mediator have been used to know the mediation effect between commercial
and total real estate loans of banks in India. The residential loans as a mediator govern the relationship
between commercial loans and total real estate loans in India. Real estate sector development is a lucrative
opportunity for India. The real estate sector plays a major role in shaping economic conditions of the
individuals, firms and family.
Design/methodology/approach –The research is descriptive in nature. The study on residential loans,
commercial loans and total real estate loans has been taken into consideration, and on the other hand the
measurement and structural model have been employed to the study the impact of residential loans and
commercial loans on total real estate loans in India by using PL–SEM. The residential loans as a mediator
have been taken to study the mediation effect of the relationship between commercial loans and total real
estate loans in India.
Findings –The outcome of the structural model that is bootstrapping technique shows that there is an
impact of residential and commercial loans by public and private sector banks on total real estate sector
development in India. The residential loans show the full mediation effect between commercial loans and total
real estate loans as the value of variation accounted for (VAF) is more than 1.93 which shows residential loans
govern the nature of variable between commercial loans and total real estate loans.
Practical implications –The public and private sector banks are contributing to the real estate sector
development in India which increases the economic growth of the country. The mediation analysis shows that
residential loans are an important aspect between commercial and total real estate loans in India as the
demand for residential housing is more in India. The increasing role of banks in the real estate sector
strengthens the financial capability in the real estate sector market, and the property buyers will able to
purchase more property which leads to increasing demand for real estate sector.
Originality/value –The research paper is original, and PL–SEM has been used to find the results.
Keywords Real estate loans, Public sector banks, Private sector banks, Path diagram,
Residential financing, Commercial financing
Paper type Research paper
Introduction
The real estate sector is the largest component of our economy. It develops the economic
conditions of the families and firms. The resources of the real estate affect the community
ability to attract and support the business profitability as well as to provide a secure,
convenient and affordable business environment for its citizens. The adequacy of the
housing stock and public infrastructure including roads, bridges, dams, airports, schools
and parks affects the quality of life in a region (LLP, Associates and ASA, 2015).
The Indian real estate is the premium sector of our economy. It is becoming the critical
sector as the demand for the real estate sector is increasing because of the large volume of
the population in India. The various reforms have been launched by the Prime Minister
Narendra Modiji like Real Estate Investment Trust and Real Estate Regulation Act,
Pradhan Mantri Awas Yojana (PMAY) to support in the development of real estate sector in
India (Tunde and Aluko, 2012).
Real estate is the property. The property is defined as anything that can be owned or
possessed. Property can be a tangible or intangible asset. The assets which are tangible
Journal of Property Investment &
Finance
Vol. 37 No. 5, 2019
pp. 455-469
© Emerald PublishingLimited
1463-578X
DOI 10.1108/JPIF-03-2019-0034
Received 17 March 2019
Revised 13 May 2019
Accepted 14 May 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1463-578X.htm
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Mediating
effect of
residential
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