| After many years'theoretical and empirical debate, most of researchers have admitted the existence of―Wealth Effect‖in advanced stock markets around the world. Howerver, this effect, describing a situation where appreciated equity assets increase residencial consumption, used to get little attention in China's stock market in the past. After more than 10 years'development, stock market has been taking on a more and more important role in China's economic, social and cultural development, especially when going through stock ownership reform in 2006 and the unprecdented bull market in 2007, thus the wealth effect of stock market could have possibly emerged as an important phenomenon. What's the special characters of our market's wealth effect, will there be any regional differences, what factors might result in those differences? Those problems are very practical subjects to tackle and their theoretical contributions will also be significant.In this paper, we first classified the wealth effect into direct and indirct impacts and made empirical researches respectively to test the existence and significance of each impact in China. On top of the results, we then tried to find the social factors that have most crucial influence on the wealth effect here. Major work and results are as follows:(1) Based on the fixed-effect LC-PIH model with panel data from 29 different provinces in China, our emipirical study result shows the nationalwide direct wealth effect does exist, but with a relatively small impact. As for individual area, there are more than half of the provinces showing direct wealth effect of statistical significance, among which Guangdong has the largest wealth effect coefficient (as large as half of those in developed economies), while in other places like Yunnan and Guizhou, the coefficients only are 1/10 of that of Guangdong. Therefore we conclude that the direct stock market wealth effect in China varies among different areas;(2) The OLS regression between consumer confidence and stock market performance shows that in China, the indirect wealth effect works through affecting the expectations of consumers towards future expenditures, but its impact on current consumer psychology is relatively neglectable;(3) We finally conclude the macro and micro factors that determine the regional difference of wealth effect: the most crucial macro factor is total amount of residents with stock market accounts, featuring the regional differences in stock market participancy; the micro facor is the ability of realizing wealth accumulation from stock market, with the gaining of unexpected capital income being the most decisive factor.Our research contributes to current study of stock market wealth effect in three aspects:(1) Distinguish the direct and indirect stock market effect in China, based on the understanding of different impacts of market performance have to real expenditure and consumer psychology;(2) Discover regional discrepancy of stock market wealth effect among various provinces within China, thus complementing current research that has only reaches nationwide level;(3) Further explore the factors that resulting in the regional discrepancy of wealth effect, which will help us to understand the real allocation of equity asset and wealth accumulation process among different areas in China. |
