The Influence Of Consumer Credit On Aggregate Consumer Demand In China

Consumer credit has been deeply integrated into our economic and social life since it born and began developing in1999. The financial crisis, triggered by U.S. subprime loans in2008, has exposed some deficiencies of the consumer credit. But it also forced China to try to expand domestic demand once again. The start-up and development of consumer credit in China aimed to meet the policy of expanding domestic demand. We cannot totally negate the role of consumer credit just because it has a little problem in U.S. Therefore, we discussed the effect of consumer credit on consumer demand once again.This thesis is divided into five chapters.Chapter1is the introduction. The first section of this chapter introduces the research background and significance. Section2reviewed the research of consumer credit at home and abroad. The last section introduces the structure and the main research methods of this thesis.In chapter2, we review the economic theory of consumer credit and consumer demand, and use these theories to analyze the mechanism of consumer credit. The first section of this chapter defines important concepts in this article, including consumption, consumer credit, consumer demand, and consumer expenditure. Section1also divides consumption into three levels according to the different roles of consumer goods for people. Section2introduces economic theory related to consumer credit and consumer demand, including the theory of consumer behavior and some of the classic hypothesis of consumption function.Chapter3describes the origins, development and current situation of the consumer credit, and illustrates actual conditions on which consumer credit could have an effect on consumer demand. The first section of this chapter describes the origin and development conditions of consumer credit, and incidentally, the development status of consumer credit in the developed countries in order to find problems of consumer credit in China by comparison to developed countries. Section2introduces the present state of the consumer credit in China. The emergence and development of consumer credit in China is closely related with government policies. In recent years, consumer credit has rapidly developed in China. Consumer credit balances has rapidly grown. Business is increasing variety but the structure is irrational.In chapter4, we make a detailed analysis of the influence of consumer credit on consumer demand including the influence on the individual consumer and on social aggregate consumer demand. We also make an empirical analysis using the method of regression on the effect of consumer credit.The first section of Chapter4analyses the influence of consumer credit on consumers. In this section, we firstly discuss the impact of consumer credit on income, preferences, and prices. According these impact, then we conclude the current and lifetime influence of consumer credit on individuals.Section2of the fourth chapter analyses the further influence of consumer credit on aggregate consumer demand of the whole society.In this section, we make an empirical analysis using the data from1997to2011in China in order to test the result of theoretical analysis. By three regression and amendments to the econometric model, we get a significant result.Chapter5analyzes problems that China’s consumer credit have and their causes and solutions. Business structure is irrational, that is to say individual housing loans account for the high proportion of consumer credit balances. Development is uneven, including the imbalance in regional development, and uneven development in urban and rural. The legal environment for the system is not perfect; it is difficult to meet the development needs of the consumer credit. The personal credit system is not fully developed... There are also some other problems of consumer credit. We suggest solutions for these problems at last.Our main conclusion of this thesis is the influence of consumer credit on consumer demand in China is significant. The consumer credit has a positive role in promoting consumer demand.Innovation in this thesis may be that we amend the model based on the particularity of the macro-statistics and the actual situation of China.