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Research On Relationship Between Consumer Credit And Macroeconomic

Posted on:2011-06-28Degree:MasterType:Thesis
Country:ChinaCandidate:C Y ZhaoFull Text:PDF
GTID:2189360305457714Subject:Quantitative Economics
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Modern consumer credit is a form of credit used to meet the consumption of individual and family. The emergence of consumer credit to some extent eased conflict between the shortage of consumer temporary purchasing power and demand .Social development and people's consumption level objectively requires consumer credit. During the recession, the government encourages consumer credit, in order to stimulate domestic demand, stimulate economic recovery.Researches on consumer credit are based on the Western economic theory. According to the characteristics of China's economic transition, domestic Scholars made qualitative analysis of consumer credit, and finally proposed the policy recommendations of developing consumer credit. As the lack of data, making quantitative analysis of China's consumer credit has some limitations. So many scholars used the U.S. consumer credit's data making quantitative analysis, and then obtained the conclusion that consumer credit promotes economic growth. Chen Min and LIU Xiao-hui (2002) though a regression model analyzing American consumer credit data, obtained consumption, consumer credit and economic growth mutually reinforcing relationship. Research between consumer credit and financial aspects, Zhang Yan-Chun and Sun Guo-Feng (2004) studied that the expansion of consumer credit could make monetary policy more clearly ease the economic fluctuations, and promote economic growth. In western countries, changes in the economic cycle promote development of the theory of consumer credit. In economic crisis, insufficient effective demand of domestic consumer credit as a solution to the crisis will be the methodology, which then forms a consumer credit theory. In 1976, Philip A. Klein put forward the theory of consumer credit cycle, using the United States data before and after the World War II, consumer credit (consumer credit outstanding, installment loans to pay off the balance at one-time) and the GNP data study. Currently, foreign scholars'studies are based on the theory side, expanding the aspect of consumer credit risk measurement and the efficiency of consumer credit.Qualitative analysis of the relation between consumer credit and macro-economic has three aspects. First of all, from the point of government, the development of consumer credit will help improving the consumption trend, expanding domestic demand and providing impetus for economic growth, also can optimize the structure of social credit. The development of consumer credit has become an important tool to regulate economy. Secondly, from point of the micro-economic theory, consumer credit is primarily based on the theory of maximization of personal utility, time preference theory and intertemporal choice theory. Fisher's "interest theory" from the perspective of time preference, discusses the current consumption and future consumption. Future generations extended the Fisher's model. From the utility point, there has been the conclusion: the current shortage of revenue for consumers, it has to apply for loans to purchase durable consumer goods to buy consumer durables, in order to improve their own utility level. With consumer credit demand increasing, consumption increases, thus promoting economic growth. Finally, from the point of macro-theory, we will through the IS-LM model to analyze consumer credit. The existence of consumer credit makes an increase of the total expenditure and money supply residents. Makes the equilibrium shifted to the right, so national income increases.Quantitative analysis majorly has the following two aspects. Respectively by the consumer credit outstanding in total credit and GDP, this paper analyzes the development of consumer credit in China. Consumption is a strong force of national economic development, according to the proportion of Chinese consumption, and economic development status, a proposal to stimulate consumer demand and consumer credit is given; using vector autoregressive model (VAR) with the macroeconomic to analyze the relationship between the consumer credit and GDP. This paper describes the processes and principles of VAR model, selecting the consumer credit outstanding, GDP, the relevant variables disposable income of urban residents (DI) and the narrow money supply (M1) to constitute the four variable VAR model. Using the quarterly data from 1997-2009 of variables to analyze the relationship. Firstly, making a stationary test, the conclusion is that these four variables are first-order stationary series. Using Johansen co-integration test, a long-term equilibrium relationship between consumer credit balances and GDP exists, the co-integration equation is estimated. Then Granger causality test is made, the test results show that consumer credit is the Grange reason of GDP growth. This result is consistent with the relationship between consumer credit and macroeconomic theories. Finally, impulse response functions and variance decomposition to study the interaction between the two levels, the results show that consumer credit outstanding to some extent has an impact on GDP, albeit the effect is small but increasing. This situation is closely related to the development of consumer credit in our country.In early 1990s, some western countries was in recession, with the result of insufficient effective demand, governments began to drive economic growth through the development of consumer credit, consumer demand, then supported economic recovery and development. At present, the proportion of consumer credit outstanding in total credit increases. Consumer credit gradually becomes the bank's main business, constitutes the main income source for banks. China's consumer credit started in the 80s of the 20th century, before the Asian financial crisis of 1997 has the slow development. At the end of 1997, China's exports be hit, demand for exports plummeted, a serious shortage of effective demand, economic growth slowed down. In views of the above, the government began to encourage commercial banks to carry out consumer credit business. Although China started consumer credit late, recent years it has rapid development. With the western developed countries, the scale of consumer credit, product type, and risk management level, there is a gap. Context of the current characteristics of China's economic development, drawing the U.S. subprime mortgage crisis lessons: the development of consumer credit should be consistent with the actual economic situation. Because a large proportion of consumer credit in our country focuses on the mortgage, according to the characteristics of the real estate market and put forward appropriate policy recommendations for the development of consumer credit. In today's highly developed consumer credit, we should be concerned about consumer credit risk. A sound social credit system, good consumer credit laws and regulations, improving risk management are all needed. Establishing a complete database of consumer credit can also provide the basis for financial institutions.Context of the current characteristics of China's economic development, drawing the U.S. subprime mortgage crisis lessons: the development of consumer credit should be consistent with the actual economic situation. Because a large proportion of consumer credit in our country focuses on the mortgage, according to the characteristics of the real estate market and put forward appropriate policy recommendations for the development of consumer credit. In today's highly developed consumer credit, we should be concerned about consumer credit risk. A sound social credit system, good consumer credit laws and regulations, improving risk management are all needed. Establishing a complete database of consumer credit can also provide the basis for financial institutions.
Keywords/Search Tags:Consumer Credit, GDP, Vector autoregressive model, Impulse response analysis, Grange causality test
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