Does financial fragility drive the housing bubble? Evidence from selected ASEAN countries

Suryati; Jaka Sriyana; Akhsyim Afandi; Abdul Hakim; Suryati; Jaka Sriyana; Akhsyim Afandi; Abdul Hakim

doi:10.3934/QFE.2026025

Quantitative Finance and Economics

2026, Volume 10, Issue 4: 649-664. doi: 10.3934/QFE.2026025

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Research Article

Does financial fragility drive the housing bubble? Evidence from selected ASEAN countries

1.
Faculty of Islamic Economics and Business, Universitas Islam Negeri Raden Mas Said Surakarta, Surakarta, 57168, Indonesia
2.
Department of Economics, Islamic University of Indonesia, Yogyakarta, 55283, Indonesia

Received: 09 February 2026 Revised: 10 February 2026 Accepted: 15 May 2026 Published: 23 October 2026
JEL Codes: E3, E6, G5

This study examined the impact of financial fragility on housing bubbles in selected ASEAN countries using the panel autoregressive distributed lag (PARDL) model and Granger causality based on quarterly data from 2010 to 2024. The findings revealed that financial system fragility influences the development of the housing bubble ratio through interest rate stimulus, stock market volatility, and bond market fluctuations. Moreover, the performance of the monetary sector has a significant positive effect on the housing bubble ratio in the short term. The causality test indicates that Singapore's housing bubble ratio significantly affects Indonesia's housing bubble ratio. Additionally, Indonesia's housing bubble increases Thailand's housing bubble ratio. Surprisingly, Thailand's housing bubble also spread to three ASEAN-5 countries, including Singapore, Malaysia, and the Philippines.
- housing bubble,
- financial fragility,
- interest rate,
- exchange rate,
- stock and bond market,
- money supply
Citation: Suryati, Jaka Sriyana, Akhsyim Afandi, Abdul Hakim. Does financial fragility drive the housing bubble? Evidence from selected ASEAN countries[J]. Quantitative Finance and Economics, 2026, 10(4): 649-664. doi: 10.3934/QFE.2026025

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Abstract

This study examined the impact of financial fragility on housing bubbles in selected ASEAN countries using the panel autoregressive distributed lag (PARDL) model and Granger causality based on quarterly data from 2010 to 2024. The findings revealed that financial system fragility influences the development of the housing bubble ratio through interest rate stimulus, stock market volatility, and bond market fluctuations. Moreover, the performance of the monetary sector has a significant positive effect on the housing bubble ratio in the short term. The causality test indicates that Singapore's housing bubble ratio significantly affects Indonesia's housing bubble ratio. Additionally, Indonesia's housing bubble increases Thailand's housing bubble ratio. Surprisingly, Thailand's housing bubble also spread to three ASEAN-5 countries, including Singapore, Malaysia, and the Philippines.

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