Analysis Of The Effects Of Real Interest Rates On Chinese Urban Household Savings

Since the reform and opening up, China has achieved high economic growth. Meanwhile residents’ income level has also increased significantly, but accompanied by high economic growth, there have been a series of problems, such as the high rate of investment, the low rate of household consumption and the high rate of household savings, For too high investment rate and low consumption in our country, a lot of researches owe to a distortion of the price of production factors, especially the interest rate control. The research on real rates’ impact on household savings has a practical significance under the situation of low real rates.This paper applies qualitative and quantitative analysis to research the influence of the interest rate on household savings. The empirical part of this article using the 2000-2013 panel data of 31 provinces, municipalities and autonomous regions to establish a dynamic panel model, using GMM estimation method, inspection of the actual interest rate of urban household savings behavior, the influence of the control of various kinds of macroeconomic variables, precautionary savings and factors such as demographic variables, consumer credit, found that real interest rates and significant negative correlation between urban residents savings rate, to a certain extent, explains the negative real interest rates in China under the condition of the characteristics of the urban residents savings rate remains high. This paper is introduced the innovative consumer credit growth, which is used to study did not consider:The introduction of the index can significantly reduce the residents’ savings and help increase the savings rate of real interest rates negative sensitivity.This paper is divided into five parts. The first part is an introduction which discusses the purpose and significance of this research, the research results at home and abroad in the field of the sort, how to arrange the structural framework of this paper and points out the article innovations and inadequate local; the second part gives a brief description about some concepts related to this article and analyze the household savings structure in detail; the third part introduces the real interest rate transmission mechanism of savings, points out the real interest rate on savings positive transmission mechanism, but also points out the particularity of the transmission mechanism in our country, so the interest rate on savings are transmission mechanism may not be established; The fourth part, in addition to the real interest rate, but also incorporates other factors that affect the savings rate, which are divided into four categories, macro-economic environment variables, precautionary savings variables,demographic variables and the growth rate of consumer credit. It examines the impact of the real interest rate on household savings rate, and it also introduce other factors to the model, and explains the results by establishing dynamic panel model and the use of variable intercept provincial Panel Data; the fifth part proposes policy suggestion on adjustment of household savings on the basis of empirical analysis.