A Critical Assessment of Housing Finance System and Policies in Emerging Economies: Evidence from India and China

Abstract

There has been a transformation from public housing finance to private housing finance system on account of higher economic growth and liberalization policy of emerging economies. This phenomenal scenario has been taken place mostly in emerging economies like India and China. However, the existence of private housing finance system and policies has resulted uneven housing finance system in both economies and also neglected the needs of lower segment of the people in the society which often deprive them from accessing their basic necessity i.e. shelter. In this context, this study raises a research question: does Indian housing financial system and policy is more effective enough compared to Chinese housing finance system? However, our reading of the literature suggests that till date, we did not find any comparative study in existence in evaluating the housing finance system and policies for emerging economies like India and China. Hence, this study, for the first time, appears to be a novel attempt of critically examining the housing finance system and policies for the Indian and Chinese economies. In doing this, we believe that this comparative analysis is expected to throw some policy implications and new avenue of empirical research scope for policy makers as well as for future research of developed countries in general and emerging economies in particular. This study appears to be theoretical and qualitative in nature as it highlights both trend and percentage analysis of housing finance depth for India and China. The key finding of this study reveals that Indian housing finance system does not benefit the poor people while housing finance system partially benefits the poor in China. The one of the major reasons for the success of Chinese housing finance system is that China effectively implements new “cheap rented housing finance policy’’ for the benefit of urban poor, whereas India does not follow this policy for the betterment of the urban poor despite having similar characteristics of both economies in higher economic growth, urbanization process and liberalization policy.