Farmers In Zhejiang Province And Savings Behavior, Empirical Research

Recently, The high growth rate of household saving in China and the motive of Chinese household saving have attracted great attention of academic community as well as policy maker. A common point of view is that the precautionary motive plays an important role in Chinese household saving behavior.In this paper, we chose rural household of Zhejiang Province, as a special group of China, to be the object of studying, to test precautionary saving motive of rural household of Zhejiang, and to analyze the other factors affecting rural household savings.We use an intertemporal, dynamic household model to test the precautionary saving behavior. A panel data, consisting of 434 Zhejiang rural families over the period of 1995 to 2006 (except 2002), is compiled in order to get a better estimating result. These data also allow to analyze the factors influencing savings.In this paper, the test of precautionary motive occupies an important position. This part of reseach includes chapter 3, chapter 4 and chapter 5. Dynamic household model is modeled under the theoretical framework of PIH hypothesis, so, before we use this model, we should estimate permanent income and uncertainty factor of rural household by modeling the income process Chapter 3 reviews the traditional approaches of household modeling and the analysis approaches, and introduces the dynamic household model we chose.Then Chapter 4 estimates permanent income and uncertainty factor using income model.Chapter 6 analyzes the saving factors by extending the explanatory variables of dynamic household model, and then, uses this new model to estimate all factors, including permanent income, uncertainty factor and financial assets.The main findings of this study are as follows: Firstly, the analysis of Chapter 5 proves the existence of the precautionary motive in saving behavior of Zhejiang rural households; Secondly, Chow Test finds rural households have changed their saving behavior over the period of 1995-2006. The effect of precautionary motive to saving behavior during 2003 to 2006 is not as strong as that in the period of 1995-2001; Third, insurance can significantly reduce savings; Finally, we find that not all household individual factors can affect household saving behavior significantly, except for fixed assets and labor dependence ratio.