The Influence Of Financial Marketization On Residents' Consumption Fluctuation

In recent years,the financial marketization reform in our country is stepping new strides,China's financial system has made some critical changes in the field of state-owned commercial banks,securities market,exchange rate,interest rate system and the opening of capital account,which promotes the development of the financial markets.While the financial markets boost the economy,it has also brought huge output fluctuation and even triggered the financial crisis.Some scholars have found that output fluctuation mainly comes from the consumption fluctuation.The consequences of consumer fluctuation are huge for developing countries,and there is evidence that consumption fluctuation will divert residents from a stable consumption path and lead to facing with greater welfare losses,so that the benefits of reducing consumption fluctuation are huge for developing countries.Based on this purpose,this paper studies the influence of financial marketization on Urban residents' consumption fluctuation.Firstly,principal composition analysis and event assignment method are used to measure China's current financial marketization level.And then,HP filter method is applied to calculate the panel data on urban residents' per capita consumption in 1992-2015.At last,the fixed effect model is established to test the relationship between China's financial marketization and residents' consumption fluctuation.The study found that financial marketization has threshold effects on residents' consumption fluctuation,which means financial marketization aggravates the consumption fluctuation due to the primary stage of financial marketization in our country and the impact will be the opposite when the financial marketization exceeds the threshold level.At the same time,the impact of financial marketization on consumption fluctuation is also affected by the level of regional financial development.In the provinces with higher level of financial development,the ability of financial marketization to suppress consumption fluctuations is stronger.Financial marketization is a process requiring continuous promotion,deepening and balanced development.In the early stage,the financial marketization will increase the fluctuation of consumption,however,it will help to reduce the consumption fluctuation and the welfare loss in the long run.Therefore,grasping the pace of financial marketization reforms,laying a good foundation,and steadily advancing the reform of financial marketization are of crucial importance to the steady and orderly development of China's economy.