Research On Household Borrowing, Default And Bankruptcy

The main topic of the paper is household debt in our country. In recent years, the scale of the individual consumer credit has dramatically expanded in China. For Chinese residents, consumer loans have already become an important consumption choice. Appropriate liabilities manifest social progress, and it is beneficial to improve the quality of life, expand domestic demand and promote domestic economic growth. However, excessive debts will become a burden to the family, and if the family is hit by all kinds of reverse things, then debt default comes into being, which will undoubtedly cause default in household consumer loans and may pose a threat to the security of household assets and bank assets, thus creating serious social problems. Therefore, it is of great significance to make a thorough study of household debt in our country.Based on the literature reviews on western household debt, the paper analyzes changes of household debts, debt default and consumer bankruptcy in the developed countries or regions. Then it uses the methods of qualitative analysis and case analysis to discuss the causes of household debt increase in China and assess the current credit quality of our family. At the same time it adopts empirical data and mathematical analysis to investigate the relationship among household debts, consumption and economic growth in our country, and then it probes into the problem of consumer insolvency. Finally the paper comes to the main conclusions and summarizes policy implications.Through the research of household borrowing,debt default and bankruptcy, the paper finds that some changes of the basic factors which have greatly promoted the rise of household debt in the developed countries or regions are: the low interest rates after the 1980s, low inflation, time preferences, new innovations in financial systems and composition of the population, etc.The important factors which cause the default of family loans are unemployment, income changes, some triggering events, the changes of family debt paying ability and so on. The default of family loans has already become western consumers'one increasingly important feature before they go bankrupt. Going into the 1990s, the main reasons of the sharp increase in cases of American consumers'insolvency are the co-work among Americans'excessive consumption, the forms of loans in financial institutions, the law and some systems related to it. Within the framework of life cycle-lasting income theory, we have found that China's recent low inflation, income rise and changes in the demographic structure have an important impact on the growing demand for family debt. On the supply side, commercial banks'increasing mobility as well as the intensification of competition between banks plays an active role in obtaining loans for the families. With the continuous development of economy, the change of family consumer concepts, the improved quality of life as well as government policy of expanding domestic demand, China's family loans will continue to rise with acceleration. And it is estimated that China's loans will reach quite a high level. Through several common indexes such as the ratio between debts and income, the paper examines the credit quality and financial situation in China's family sector. In the process of the rapid infiltration of consumer credit to household sector, so far serious distorted signals of family credit quality have not arisen. Changes in the level of family debt have important effect on consumption growth. The use of debt leverage forms a key feature which is different from the past in China's recent economic growth. With the increasing expansion of the scale of our family loans, in the meantime, the risk of repaying the consumer credit money immediately emerges. In the perspective of controlling social crisis, the design of the consumer bankruptcy system is extremely urgent.Therefore, the effective policies and measures to cut down the high rate of our family loans which bring about various risks are: building and improving the social security system, perfecting the legal environment of personal credit, improving credit guarantee mechanisms, establishing consumer bankruptcy system, actively adjusting the policies of income distribution and constantly improving the level of income.The paper attempts to achieve the following two innovations: First, to the evolving features of our household debt, manifestation of risks as well as administration, current theorists'study of them is still in sporadic and applied exploration. In view of it, this paper, with the use of the theories and methods of modern economics and relevant data, makes a comprehensive and systematic study of the Chinese family debt and expands this area of research. Secondly, in the light of the present situation of the increasingly growing Chinese household debt, the paper proposes that more concern be given to the crisis of family debt and Chinese consumer bankruptcy law be implemented as soon as possible, which is forward-looking in a certain sense.