Research On The Chinese Residents' Precautionary Savings

For a long time, Chinese residents' savings have been increasing abnormally, thus how to solve China's high savings rate has become a wide public concern. Since uncertainty is a norm during the transformation period, the precautionary saving theory has got enormous attention in literatures studying Chinese residents' savings. Although residents'precautionary saving behavior is confirmed in most literatures, many issues remain unknown, for example, of the rural and urban precautionary saving motivation which is stronger; whether the precautionary savings is the main reason that leads to rural and urban wealth accumulation and what are the main factors influencing the precautionary savings are still to be learned. Therefore, based on the existing literatures, this paper titled as "Research on the Chinese Residents' Precautionary Savings" focuses on the above three issues. The detailed contents of all chapters are as follows.Chapter I is the preface which mainly introduces the study background and significance, the study design and framework, as well as the innovation.Chapter II is the literature review which reviews the formation and development of precautionary saving theory. Focusing on the existence condition of precautionary saving motivation, the test of precautionary saving motivation, the importance of precautionary savings and the decomposition of uncertainties, this chapter summarizes literatures home and abroad and pointes out the further study area, introducing this paper's main study task.Chapter III briefly introduces precautionary saving theory. Beginning with the interpretation of the basic concept of "uncertainties" and its basic meaning in this paper, this chapter gives a brief introduction to consumer's consumption decision-making behavior under uncertain conditions with the expected utility maximization theory as its theory basis, on which mathematical inference and geometric graphs are adopted to illustrate the influence of uncertainties bring to consumers' savings decision.In the end, the chapter analyzes the current situation of Chinese urban and rural residents' are being faced with more and more uncertainties during the transformation period and indicates the potential application of precautionary saving theory in China.Chapter IV deals with the test of urban and rural residents' precautionary saving motivation. Different from most literatures based on the analysis of the coefficient of relative prudence, this paper takes the coefficient of absolute prudence as the standard to test the intensity of consumer precautionary saving motivation, especially in the comparison of different consumers' precautionary saving motivation intensity. Thus, this paper based on the2000-2010provincial panel data tests Chinese urban and rural residents' precautionary saving motivation under the CARA utility function assumption and compares urban and rural residents'precautionary saving motivation intensity. The result shows that both urban and rural residents have obvious precautionary saving motivation and the rural residents'motivation is more intense, about1.5times that of urban citizens. What must be made clear is that although the test confirms the urban and rural residents' precautionary saving motivation, precautionary savings is not necessarily the main reason for Chinese high savings. Therefore, compared with whether there exists precautionary saving motivation for Chinese residents, what this paper cares more about is how much precautionary wealth has been accumulated by their precautionary saving behavior.Chapter V further studies to what degree precautionary savings can explain urban and rural residents'wealth accumulation under a unified theory framework and the same period's sample data. According to consumers' intertemporal consumption decisions model, consumers'precautionary savings accumulation function under uncertainties can be calculated. Combined with the reality and economic theories, various parameters in wealth accumulation function can be assigned, resulting in the value of urban and rural residents'precautionary wealth per capita and the percentage of precautionary savings in their whole wealth. The estimation in this chapter shows that rural residents' precautionary wealth per capita is about?3000, taking a34%percentage of per capita financial property; for urban citizens, per capita precautionary wealth is?9000, being20%of per capita financial property. Therefore, no matter from the absolute quality of urban and rural residents' per capita precautionary wealth and the percentage of precautionary wealth in financial property, this chapter concludes that precautionary savings is one of the significant reasons leading to Chinese urban and rural residents' underconsumption.Chapter ? explores the main factors influencing Chinese residents' precautionary wealth accumulation from the aspects of precautionary saving motivation and uncertainties. Firstly, through the test of the precautionary saving motivation of residents with different income levels, this chapter finds out that the intensity of consumers' precautionary saving motivation is connected with their income level---residents with higher income have a weaker precautionary saving motivation. Then using the time series data of the first quarter of2013to the third quarter of2012, the chapter tests the influence of investment yield uncertainty on urban citizens' precautionary savings and confirms that consumers are sensitive to investment yield uncertainty, and compared with the stock market, the interest market's uncertainties more facilitate consumer precautionary saving motivation. Specifically speaking, if increasing the same size of yield rate risk in the interest rate market and the stock market, the fluctuation of incremental consumption expenditures caused by the risk in the interest rate market is nearly40times that of the latter one. In the end, according to the provincial panel data of urban citizens' classified consumption expenditure, consumers' prudence to different uncertainties is tested, showing that urban residents'consumption expenditure is more sensitive to the uncertainty of various expenditures than that of their revenue, and among various expenditure uncertainties, medical and housing expenditure uncertainties affect most obviously their saving behavior.Chapter ? proposes some policy suggestions for reducing urban and rural residents'precautionary savings. According to the previous empirical results, the author holds the view that residents' precautionary savings demand can be weakened from four aspects like resident's revenue, investment yield, asset safety and social insurance. When enacting specific programs, the particularity of urban and rural residents should be noticed. For urban residents, precautionary saving motivation is relatively weaker and their precautionary wealth accumulation is due to the intense uncertainties they are faced with, thus, various measures will be taken to lower the uncertainties; while for the rural residents, due to not only intense uncertainties but also lower income level, their precautionary saving motivation is more intense, so that besides lowering the uncertainties, their revenue should be increased to weaken their precautionary saving motivation.The last chapter summarizes this thesis' main study results and also the shortages, as well as future study area.Through the empirical study of Chinese urban and rural residents' precautionary saving behavior, this thesis concludes that Chinese residents' high precautionary savings is the significant reason for China's consumption demand shortage, and by weakening the uncertainties they face in aspects of labor revenue, investment yield, education expenditure, housing expenditure, medical expenditure, etc., their precautionary saving demand can be weakened. Although urban citizens have a higher precautionary savings level, it doesn't mean that governments' common policy is necessary to slide to urban residents. What must be paid attention to is that under Chinese unique urban-rural dual structure, rural residents'absolute income and consumption are still far below that of urban residents, and they have more intense precautionary saving motivation and a higher precautionary savings percentage. As a result, the government should further perfect rural social insurance system, break the dual structure, push the urbanization construction, develop rural residents'consumption, as well as dismiss urban and rural divergence, which will not only release much consumption demand potential, but also contribute to the solving of the long puzzling residents' saving overdevelopment, as well as benefit economic development and social stability.