Study On The Influence Of Saving Preference On M₂/GDP Ratio

China's M2/GDP ratio has continued to rise,surpassing developed countries such as the United Kindom and the United States,and has become one of the countries with the highest ratio of M2/GDP in the world.This horizontal and vertical abnormity has always been highly concerned by the academic community.At the same time,the high M2/GDP ratio in China was not accompanied by rising price,which was inconsistent with economic logic and caused difficulty for the Central Bank of China in implementing the monetary policy.The M2/GDP ratio reflected the excessive supply of money,while the price level reflected low supply of money.Therefore,the study on the abnormality of M2/GDP ratio in China has theoretical and practical significance.Based on the present studies,There was no logical explanation for the mystery of China,the reason of which is the underestimated influence of saving preference.Therefore,the thesis took the saving preference as a breakthrough,and combined M2 and GDP to analyze the ratio,that is,M2 was regarded as input and GDP is considered as output.To further the analysis,the thesis devided the saving preference into three levels:total saving preference,structural saving preference,and capital conversion rate of saving.Through theoretical analysis,we functionalized the influence of saving preference on the ratio of M2/GDP,and verified the direction of influence of saving preference with three levels by derivation.On this basis,the hypothesis that there was a correlation between saving preference and M2/GDP ratio is proposed.Then,the thesis built a fixed-effect model with multi-country panel data.The empirical result revealled that the increase in total saving preference would significantly increase the M2/GDP ratio,that the more the holding principals relied on bank deposits,the higher the M2/GDP ratio became,and that the increasing capital conversion rate of bank deposits and financial assets would suppress the M2/GDP ratio.Hence,the conclussion was proposed that the saving preference was an important factor leading to the increase of China's M2/GDP ratio,and that taking the ratio of M2/GDP as an important or even the only indicator to measure financial deepening and economic risk was not scientific.The policy recommendations included:Firstly,the issue of relieving the high ratio of M2/GDP must start with the saving preference;Secondly,we must pay close attention to the level and changing of saving preference to measure financial deepening and economic risk.