Study On Savings Motive Of Urban Residents In Shandong Province

Shandong province has experienced rapid and stable development in economy since reform and opening up and meanwhile, the income of urban residents has improved significantly, accordingly, the savings of urban residents have increased substantially. The balance of savings deposits of urban residents of Shandong province has reached 726.921 billion by the end of 2006, which accounts for 28 percent of GDP that year. The savings of urban residents have been increasingly important to the economic development of Shandong province, but how such a large-scale savings affect the sustainable development of Shandong province is well worth considering.In the paper it outlines the saving theories, analyzes the traits of savings behavior of urban residents of Shandong province, and then studies the main factors affecting the savings of urban residents and the motive of savings. On the research of savings motive , we find that savings motive, which means residents put a significant portion of income to savings rather than consumption for the reason that the uncertainty on the future income and expenditure urban residents facing enhances with the reform of economic system and other related systems. If this situation continues, it will certainly have a negative impact on the sustainable development of Shandong economy, so the study of precautionary savings for urban residents has a very important practical significance.Many scholars generally consider that consumption on education, health care, housing is the main reason for precautionary savings. However, this conclusion lacks of rigorous scientific examination for the reason that it is essentially based on the consumer survey. The buffer stock model scientifically verifies whether the uncertainty in the three categories of consumption mentioned above is the main reason for the precautionary savings of urban residents in Shandong Province and its impact on precautionary savings.At the end of the paper, we make some policy recommendations on stimulating consumption and investment according to our relevant conclusions. Based on the actual situation of precautionary savings, three corresponding measures are proposed. Firstly, we should accelerate the establishment of a full range of social security system benefiting the urban residents to enhance the economic security of the residents, including the social security system such as the reform of education system and health care system. Secondly, we should expand private investment and social employment to reduce Precautionary savings resulting from the uncertainty and risk of unemployment. Thirdly, we should promote the fair of opportunity and improve the income of low-income households to reduce the income gap between the different income levels. Thirdly, we should regulate the rules of the capital market, activate the securities market and enrich the investment channel and products to attract savings into the capital market.