China's Consumer Credit And Its Development

Consumer credit is a financial product that emerges to harmonize the conflicts between consumption and production, as the economy developed to a certain stage where the credit system is quite sophisticated and the growth rate of consumption lags behind that of production. In our market economy, consumer credit can be an important measure to adjust consumption demand, stabilize the economy and ameliorate the quality of commercial banks?assets. From experience of the developed countries, the development of consumer credit is beneficial to all the parties - government, banking system and consumers. Consumer credit in China got off the mark with the introduction of the housing system reform, but it did not came into full-scale implementation until the central bank抯 issuance of the Guide for Personal Consumption Credit Operation in March 1999. Between those 10 years, the development of consumption credit is quite slow, and consumer credit loan took up only a nominal share of 1% of the total bank credits, a far cry from that of American (55%), Canadian (33.3%), Malaysian (13%), Korean (11%), and Hong Kong (23%) banks. However, from another perspective, this also means that there exists great market potential for consumer credit in China. The development of consumer credit market can be a great promotion to the mechanism of our socialist market economy, a major aid to overcome the demand deficiency, and a measure to stabilize the economic growth. 昑his thesis is focused on consumer credit development in China. For beginning, I will give a theoretical definition of consumer credit, followed with a review of emerge and development history of this financial product in China, and an illustration of the necessity to its development in China. After that, I will identify some major probierns lacing its development, and finally make some suggestions based on lessons learmx抎 on developed countries?experience. The text of this thesis is divided into three sections, the content and major points of each section are as followed: Section 1 begin with a theoretical introduction of consumer credit抯 characteristics, objectives and requirements for applicants, then it will go I on to a review of emerge and development history of consumer credit in China, and illustrate the necessity to its development in China based on market size comparison between China and other more developed countries. This necessity is justified because: 1. For the government, the consumer credit can be a powerful tool to promote consumption demand and facilitate the economic growth. 2. For the banking institution, the consumer credit market is a major new growth area, the development and promotion of consumer credit can effectively improve and optimize the structure of commercial bank抯 balance sheets, and increase the bottom line. Furthermore, the development of consumer credit market will facilitate the transformation of business perspective and boost the professional level of the bank抯 staffs. 3. For the consumers, the development of consumer credit can improve the quality of life, maximize the utility, increase their purchasing power, and represent new channels of finance management and investment. From above representation, I draw the conclusion that the...