The Risk Level of Viet Nam Real Estate Industry Under Financial Leverage During and After the Global Crisis 2009-2011

Abstract

This paperwork evaluates the impacts of external financing on market risk for the listed firms in the Viet nam real estate industry, esp. during and after the financial crisis 2009-2011.First of all, by using quantitative and analytical methods to estimate asset and equity beta of total 45 listed companies in Viet Nam real estate industry with a proper traditional model, we found out that the beta values, in general, for many institutions are acceptable.Second, under 3 different scenarios of changing leverage (in 2011 financial reports, 30% up and 20% down), we recognized that the risk level, measured by equity and asset beta mean, decreases when leverage increases to 30% but increases more if leverage decreases down to 20%.Third, by changing leverage in 3 scenarios, we recognized the dispersion of risk level, measured by equity beta var, increases from 0,219 to 0,316 if the leverage increases to 30% whereas decreases to 0,166 if leverage decreases to 20%. But the dispersion measured by asset beta var decreases to 0,082 (leverage down 20%), showing leverage impact.Finally, this paper provides some outcomes that could provide companies and government more evidence in establishing their policies in governance.

Keywords: equity beta, financial structure, financial crisis, risk, external financing, real estate industry

JEL CLASSIFICATION : G010, G100, G390