Research On The Impact Of Consumer Credit On Economic Growth In China

Before the Second World War, the primary means of regulating consumer finance are finance and revenue policies. The consumer credit has made rapid development after the war. Since Western countries used monetary policy as an important means of regulation of consumption from the 1950s, consumer credit has been developing rapidly. In the early 1990s, there is an economic recession in Western countries. In order to solve the lacking effective of demand, many countries had beginning to develop consumer credit. China's consumer credit originated in the 1980s, it has been at the exploratory stage before the Asian financial crisis. At the second half of 1997, China's exports plummeted. There was a big problem of lacking of effective demand, which may lead declining economic growth. The government introduced policies to encourage commercial banks to develop consumer credit. After more than a dozen years development, China's credit consumer credit balance has an increase from the 45.617 trillion in 1998 to 7227.7 trillion in 2010. he main contents of this article is whether the rapid development of consumer credit in China can play a role in promoting economic growth and how much the effect will be.A combination of theoretical and empirical research methods are used to illustrate the effect of consumer credit to the economic growth of China. The paper is also focus on the policy proposals of developing China's consumer credit. The article can be divided into six parts.The first part is a review of the research on relationship between consumer credit and the economic growth. The study of consumer credit started early in foreign countries, information and data is relatively rich and studies are concentrated on the quantitative analysis. As the less development and lacking information of credit consumer, few empirical studies of consumer credit in China. The scholars' research of consumer credit in China is concentrated on the qualitative analysis or analyses the consumer credit of china using the data of the United States to make policy recommendations.The second part is the economic analysis of consumer credit and economic growth. Firstly, there is a brief description of definition and classification about consumer credit; secondly, a consumption of the most influential theory of consumer credit in recent years are introduced; thirdly, the paper analyzes the pathways of influences between consumer credit and economic growth, including direct and indirect; finally, it analyzes the significance of development of consumer credit in macroeconomic, mesoeconomic and microeconomic three levels. The third part is the status quo of China's economic growth and consumer credit. This part we summarize the economic growth and the development of consumer credit at the present stage of China. Since 1999, the size of China's consumer credit had a rapidly growth. Not only the absolute amount increased, but also in the proportion of loans of financial institutions and deposits of residents has emerged a rising trend.The fourth part is the empirical study. We utilize VAR to analyze the impact of consumer credit on economic growth. We select the seasonal data of balance of consumer credit, consumer demand, GDP. We determine there is a long-term relationship between consumer credit and economic growth by unit root test of ADF and Johansen co-integration test, analyze the effect by impulse and variance decomposition.The fifth part is some policy recommendations about the development of consumer credit. We propose them from three aspects that are macro, mid-scale and micro, which include:promote the functions of government on the development of consumer credit, improve its external environment; increase financial institutions' initiative, develop its by actual situation, perfect personal credit system, innovate new breed and simplify its application procedures; alter residents'financial management concepts, decrease consumption cost, encourage residents to consumer, pay attention to residuals'education, improve the quality of consumption and realize the sustainable development of consumer credit.The sixth part is the conclusion of the paper.