The Study Of Credit Card And Household Consumption

It’s been28years since credit card entering to the China. With the prosperity of the credit card market, the habits of Chinese’s consumption also began to change. The credit card play very important role in transforming Chinese traditional consumption concept. The data show that the annual consumption of the credit card in China had reached4.1trillion in2011, accounted for22.6%of retail sales of social consumer goods. Credit card consumption has become an important driving force to promote China transformation to the consumer society. Research report released by the Boston Consulting Group in August2011had mentioned that:"the personal short-term consumer loans and credit card will be the fastest growing consumer financial products in the future. Now paying by the credit card has become the preferred way of many household in large amount of consumption. Lots of people use credit card when they shopping on online mall, buying automobile credit card installments product and so on.According to the theory of liquidity constraints, as an important part of the short-term consumer credit, credit cards enable consumers to consume according to expected income by effectively easing the liquidity constraints of the residents. In the same time, as an important payment instruments, credit cards also provide more convenient and secure payment services. In the context of expanding domestic demand and adjusting economy structure in our country, it’s may be good for understanding the future trends of China’s consumer finance and finding the evidence to support the development of consumer finance in the empirical level. However, due to the lack of data, the domestic literature on credit card is rare. This paper hopes to make a contribution to the credit card research by empirical study using CHFS data.Using the qualitative and quantitative analysis approach, the empirical results show that credit card at all levels affect consumption significantly, which has the strongest impact on the total consumption of the residents. The use of credit cards show different characteristics in different age groups, the oldest group has the largest MPC. Also some other control variables have significant effect on consumption too, such as the level of education and family scale. Maybe these influences need much deeper research.This paper is according to the data of China Household Finance Survey, the date is from the8438households in2011.The survey use nationwide random sampling approach, so the data is very representative. The OLS regression method is used to estimate the cross-section data in the paper. There are still some places need to be improved constrained by the research capabilities.