Analysis On Consumer Credit And Consumption Behavior Of Urban Residents In China

The research on consumer credit and consumer behavior has been given increasing attention in the international world. From the angle of worldwide, a lot of literatures show that consumer credit has a significant and widespread influence on consumers' behavior, and foreign central banks are more preferable to use monetary policy to control consumer behavior. The rapid development of consumer credit in China dates back to the late1990s, especially after the1997Asian financial crisis. Facing the sudden emergence of consumption shortage, the Chinese government timely takes a series of effective measures to expand domestic demand, an important one is consumer credit. In1999, the people's bank of China issued "Guiding Opinions On The Individual Consumer Credit".After that, consumer credit developed rapidly in China with economic transition and the state encouragement policies.Although China's consumer credit has a fast development, the consumption propensity of domestic residents appears declining instead of ascending, which is a sharp contrast to other countries and a large deviation from original purpose of the development of consumer credit. Since the2008financial crisis, the government has actively adjusted the domestic policy, as a tool of pulling domestic demand, consumer credit was taken seriously once more. The people's bank of China, the ministry of commerce and related departments are all actively exploring the financial measures to promote consumption during the twelfth-five. In such cases, an emerging question is that whether consumer credit can really affect the consumer behavior of China residents? If this is so, and how? What about the effect? And what's the influencing factors? These are the reasons for writing the paper.Based on modern consumption theory and considering the particularity of China urban residents'consumer behavior, this paper makes a comprehensive study of the relationship between consumer credit and China urban residents' consumer behavior in a qualitative and quantitative way, emphasizing on the positive analysis. The paper consists of seven chapters. Chapter1is introduction, Chapter2and chapter3respectively introduce the related literatures and development of domestic consumer credit. On the basis of modern consumption theory, Chapter4tests the relationship between consumer credit and urban residents'consumer behavior from an overall view; Chapter5summarizes its influence way of consumer credit on urban residents' consumption behavior, and further does an empirical test on China's reality. From a quantitative angle, Chapter6empirically analyzes the effect of consumer credit on stimulating domestic demand and reducing households saving rate, and makes preliminary discussion on the influencing factors. Chapter7is the conclusions and suggestions.The mainly conclusions and innovations are as follows.First, the general relationship test between consumer credit and urban residents' consumer behavior shows, since2004consumer credit has had significant influence on urban residents' consumption behavior, credit conditions change already can affect urban residents' consumption behavior, and the effect is realized mainly by the volatility of consumer credit growth rate. In addition, the sensitivity of consumption behavior to consumer credit varies in different regions and different income levels, therefore the government should pay attention to this difference when establishing related policy. Domestic studies mainly emphasize on the necessity and importance of consumer credit and residents' consumption, but rarely base on the positive analysis of modern consumption theory. Therefore, this paper makes up this deficiency to a certain extent.Second, the test on how consumer credit affects urban residents' consumption behavior finds that consumer credit can promote current consumption to a certain extent. However, consumer credit mainly eases current liquidity restrains and promotes durable goods expenditures, which can not reduce urban residents' savings pressure as well as can't effectively play the role of consumption insurance. High "large rigid spending" cost and the uncertainty of future payments maybe the important reasons which limit the mechanism of consumer credit. Based on modern consumption theory and considering the particularity of China urban residents' consumer behavior, this paper concludes the mechanism of consumer credit on urban residents' consumer behavior and makes an empirical test with available data, which has strong theoretical and empirical value.Third, the analysis of consumer credit effects on expanding domestic demand discovers that consumer credit is only to lower the over-fast increasing tendency of savings rate, but not to reverse the foundation of high savings rate, and the effectiveness of consumer credit is limited. Generally speaking, current consumption credit is not so valid in stimulating domestic demand and reducing household savings rate. Combined with empirical result, the paper preliminarily explains what reasons give rise to this phenomenon. From the point view of quantitative analysis, the paper evaluates the effectiveness of consumer credit on stimulating domestic demand using the advanced dynamic GMM estimation method, which is innovative both in the research objects and methods compared with similar domestic research.The policy implications of this paper is:consumer credit can promote domestic consumption in a certain extent, but in the view of China's current economic environment, only depending upon consumer credit to stimulate domestic demand may not be effective. The paper argues the basic method to transform residents' consumption shortage is to develop consumer credit, and meanwhile implement macro-control on the determinants of high savings rate, such as income uncertainty, social security benefit deficiency, increasing living cost and income distribution gap etc. On one hand, only these factors change can China's consumption propensity be fundamentally improved; On the other hand, with favorable macroeconomic factors, developing consumer credit indeed does better to consumption and will finally stimulate domestic demand. The superposition of these two effects will get twofold results with half the effort in expanding domestic demand.