The Measurement,Cause And Effect Of Financial Assets Shortage In China

Since the beginning of the new century,China’s macro-economic operation has two prominent phenomena:on the one hand,the money supply has ultra-conventional growth,embodied as excess liquidity;on the other hand,the price of the real estate which as the representation of non-monetary assets is higher and higher,asset bubbles is serious.These two phenomena lead to a series of problems such as structural inflation,severe social leverage and low economic growth,and these problems threaten the steady and healthy development of the national economy.It is very important to clarify the causes of the quantity and the price imbalance of all kinds of assets to solve the economic problems faced by our country.But the existing theory still lacks the perfect explanation.In 2006,Professor Caballero put forward the hypothesis of asset shortage,which expounds the relationship between the quantity of financial instruments and the scale of savings from the perspective of financial development.When the supply of financial assets cannot meet the demand of financial assets,asset price increases,the economic downturn,lower long-term interest rates,the current account surplus and so on are the inevitable result through the analysis of the relationship between supply and demand of financial assets.To some extent,the asset shortage hypothesis which has attracted the attention of domestic scholars can explain the problems in China.But this hypothesis takes developed countries as the research object,so it exists many problems in the interpretation of Chinese problems.The theory needs to be further expanded because it lacks micro foundation and the assumptions is changing.To clarify whether China’s financial assets shortage exists,why there is shortage of financial assets and how financial assets shortage affects the macro economy has important significance to deal with the problems that current macro economy is facing and to make clear financial reform direction under the direction of the Central Committee to accelerate the pace of financial reform.In this paper,the research framework and paradigm of the traditional asset shortage theory are extended to the reality of China.The theory of asset shortage is combined with the practice of China on the basis of the study of China’s reality.We defines the connotation of China’s financial assets shortage,and clarifies the causes of the shortage of financial assets and the impact mechanism on the macro economy.The paper puts forward that financial reform should be oriented to solve the problem of financial asset shortage,how to enrich and improve the supply of financial assets is an important way of financial reform in the future.In the research ideas,this article expands research along the definition,measurement,causes and the macroeconomic impact of financial assets shortage.In the research content,combined with the research ideas,we research three aspects,that is,the definition and measurement of financial assets shortage,the causes of financial assets shortage and the impact mechanism of financial assets shortage.Specifically,first,we define the connotation of the financial asset shortage.A reasonable definition of the financial assets shortage is the starting point of the full text of the study.On the basis of the study of financial assets of domestic and foreign scholars,we have incorporated the reality of China,defined the connotation of China’s financial assets.Then we point out the problems existing in the construction and application of the traditional index to measure the shortage of financial assets,and puts forward a new index.We use this new index to judge whether there is a shortage of financial assets in China by comparing the supply and demand of financial assets between China and other countries.Second,we explain the causes of the shortage of financial assets from two angles of demand and supply.The demand for financial assets is derived from savings,and the relationship between savings and financial assets is obtained by comparing the savings rate and the asset structure of the household sector in each country.The supply of financial assets comes from the financial system,by comparing the difference of the supply structure of financial assets between China and other countries,we find the problem of the supply of financial assets in China.On this basis,this paper analyzes the impact of various factors on the shortage of financial assets through the co integration test.Third,we study the macroeconomic mechanism of the impact of the financial assets.Shortage of financial assets first makes the family assets structure and social asset structure imbalance through the impact of asset selection and asset substitution.By constructing an asset substitution model which is brought into the shortage of financial assets,we have made clear that the shortage of financial assets can affect the asset substitution and then affect the macroeconomic,this affect is characterized with time.On this basis,this paper further studies the relationship between financial assets shortage and structural inflation,and the relationship between financial assets shortage and declining savings investment conversion rate.From a new point of view,these problems are explained.The whole process provides a new perspective for the application of the asset shortage theory in China,expands and enriches the theory of asset shortage.In this paper,the following conclusions are drawn from the theoretical model and empirical test.First,for a long time,there is a shortage of financial assets in China,which is caused by the mismatch of the demand structure of financial assets and the supply structure of financial assets.With the rapid growth of the income level,the level of savings continues to improve,the family’s financial assets structure should be based on non-monetary financial assets,but due to the slow development of the financial market,non-monetary financial assets supply is insufficient and the quality is not high,unable to meet the residents’ demand of financial assets,investment channels of residents are narrow,financial asset shortage has existed for a long time.Second,the shortage of financial assets has an impact on the macro economy through the Mandatory Asset Substitution,which can lead to the imbalance of the family assets structure and the social capital structure,and the impact of this kind has stage.Financial assets shortage affects the people’s choice of assets,led to the excessive replacement of assets,in the 1990s showed high savings deposit characteristics,and in the new century it is featured by the coexisting of high savings and high real estate prices for a long time Third,the existence of the financial asset shortage makes the crowding out effect of house price rising more than wealth effect,thus showing the coexistence of high housing price and low inflation.Empirical studies show that when there is no financial assets shortage,housing price will promote the consumption and pull up the inflation,when there is a shortage of financial assets,the effect of housing prices on consumption is weaken.This is because the shortage of financial assets makes the speculative property of the house greater than the consumption attribute,prices rise too fast will suppress consumption.Fourth,the shortage of financial assets makes the savings investment conversion rate lower,resulting in savings over investment for a long-term which not only affects the economic growth,but also led to the imbalance of international payments.It is found that the existence of financial assets shortage can reduce the conversion rate of savings and investment from quantity and quality,and thus reduce the long-term economic growth rate,at the same time,China’s long-term current account surplus is also closely related to the financial assets shortage.Based on the conclusion of the paper,we propose to further promote the interest rate market,promote consumption,vigorously develop the asset securitization,promote the transition of commercial banks,build and perfect the multi-level capital market and gradually open up the foreign investment of residents.These suggestions provide a reference for better promoting financial reform.