The Impact Of Financial Market Development On Household Consumption

Consumption has become one of the important driving forces of China’s economic growth.However,for a long time,the insufficient release of the consumption potential of China’s residential sector,the low overall consumption level,the low consumption rate,weak growth and prominent structural contradictions have become the important factors restricting the sustainable development of China’s economy.Especially at the critical historical juncture when China’s economy has shifted from a high-speed growth stage to a high-quality development stage,in the key period of changing the development mode,optimizing the economic structure and transforming the growth power,we should clear the institutional obstacles affecting residents’ consumption,improve the consumption environment,and make use of various policy measures such as finance、taxation to effectively improve residents’ consumption level and promote the upgrading of residents’ consumption.Releasing residents’ consumption potential has become the key to realizing high-quality development.In this context,with the continuous development of China’s financial market,the concept of Inclusive Finance has been deepened,and consumer finance has developed rapidly.But at the same time,there are also some new problems.People believe that irrational consumption may aggravate the instability of economic development and damage the interests of consumers at the same time.Facing the doubts in theoretical research and practical development,it is of great theoretical research value and practical significance to deeply study and comprehensively clarify the impact of financial market development on Residents’ consumption.This paper focuses on the core issue of "What impact the development of China’s financial market has on residents’ consumption".Using the data of China Household Finance Survey(CHFS),this paper selects four types of financial function in which residents’ families participate more,which is bank consumer credit,Internet credit,insurance and financial investment from the two levels of market structure and product business.This paper makes a comprehensive investigation and empirical test on the relationship between China’s financial market development and household consumption,and analyzes the impact mechanism and transmission path of financial market development on household consumption level and consumption structure.The results show that the development of China’s financial market can significantly promote the improvement of household consumption level and consumption structure.However,due to different influence mechanisms,different financial products and different types of households have certain differences.From the perspective of the impact of the evolution of financial market structure on household consumption,the banking industry occupies an absolute dominant position in the current China’s financial market system in terms of the number of institutions,asset scale,customer group and service coverage.Considering that market concentration reflects the degree of market competition,also determines the efficiency of the market,and affects the inclusiveness of financial market development and the availability of financial services,this paper selects the market concentration index HHI of the banking industry as the main explanatory variable for analysis.The analysis results show that the development level of banking industry can significantly improve the level of household consumption expenditure,and has a stronger marginal promotion effect on young groups,low asset groups and low-income groups.In terms of promoting the upgrading of household consumption structure,the improvement of the development level of the banking industry can effectively reduce the proportion of basic household expenditure such as clothing,life,transportation and communication in the total consumption expenditure,but the boosting effect on developmental consumption such as medical care,education and entertainment is not obvious.From the perspective of the impact of banks on consumer credit,this paper synthesizes the actual participation of households in bank consumer loan business and credit card business,and analyzes it as the main explanatory variable.The empirical test results show that bank consumer credit can significantly improve household consumption expenditure.At the same time,the younger the head of household,the lower the level of household assets and the shorter the number of years of education,bank consumer credit plays a stronger role in promoting their consumption.This also confirms that financing constraints are an important factor limiting household consumption ability at present.From the perspective of improving the consumption structure,consumer credit can significantly increase the proportion of development consumption expenditure and reduce the proportion of survival expenditure,so as to optimize the household consumption structure and help families realize the cross period optimal allocation of resources.From the perspective of the impact of Internet finance,this paper takes the online financing business of non banking financial institutions such as consumer finance companies and online small loans handled by residents through the Internet as the main explanatory variable.Through the OLS effect regression analysis,it is found that Internet finance can significantly increase the level of household consumption expenditure.Compared with bank consumer credit,Internet finance has stronger financial inclusiveness and a wider range of services and customers.Heterogeneity analysis found that whether low-income families or middle-income families,regardless of years of education,Internet financial has a significant role in promoting their household consumption expenditure.From the perspective of consumption structure,Internet finance can significantly improve the household consumption structure,reduce the proportion of survival consumption expenditure and increase the proportion of development expenditure.From the perspective of the impact of the insurance market on household consumption,this paper takes the participation of the insurance market as the main explanatory variable.Panel data analysis shows that buying insurance to obtain insurance protection can significantly increase the level of household consumption expenditure.Among young families with low risk resistance,low education years and low-income groups,purchasing insurance can effectively reduce the Preventive Savings of such families to cope with future risks,and play a stronger role in promoting their consumption expenditure.From the perspective of the impact on the consumption structure,the purchase of insurance by families can significantly increase the proportion of family development consumption expenditure and reduce the proportion of survival consumption expenditure,so as to optimize the family consumption structure.From the perspective of the impact of financial investment,this paper takes the household participation in the investment of risky financial assets such as stocks,funds,bonds,financial products and financial derivatives as the main explanatory variable.The regression analysis show that financial investment can significantly increase household consumption expenditure through wealth and income effects.The promotion effect on household consumption is significant in various types of subdivided consumption such as food,housing and medical treatment,indicating that the promotion effect of financial investment on household consumption is more significant.At the same time,financial investment can improve the household consumption structure.On the basis of meeting the demand for survival expenditure,it can significantly increase the proportion of household development consumption expenditure such as transportation and communication,education and entertainment,and effectively optimize the cross period allocation of household resources.The five empirical test and analysis results show that the development of China’s financial market provides functional services such as financing,investment,payment and risk management for household consumption,which can effectively alleviate the liquidity constraints faced by households,reduce the risks and uncertainties faced by households,increase the stable income of households,and significantly increase household consumption expenditure.It also has different degrees of positive impact on improving household consumption structure.Therefore,we should actively accelerate the development of financial market,strengthen the development of Inclusive Finance,sink financial services,expand the coverage of insurance,improve the multi-level capital market system,provide diversified financial investment tools,and provide a good financial environment for promoting the growth of household consumption.Compared with the previous research,this paper tries to have the following four innovations : First,this paper broke through the existing perspective of analyzing the impact of a single financial market or product on Residents’ consumption.Under the historical background of the dual changes in the economic system and development level,it studied the changes in the organizational structure of the financial market,focusing on the four functions of financing,investment,payment and risk management,from the four aspects of bank credit,Internet finance,investment and insurance,A comprehensive and systematic study of the various impacts of financial market development on household consumption is more conducive to a comprehensive and accurate evaluation and grasp of the actual impact and mechanism of financial development on consumption.Second,under the background of unbalanced and insufficient economic development in China,this paper fully considers the objective facts of household consumption heterogeneity,adopts cluster analysis and other methods,introduces multiple control variables in the modeling process,and compares them before and after.At the same time,through the heterogeneity analysis of different groups,this paper fully reveals the impact of financial market development on different types of household consumption behavior,It is a supplement and improvement to the relevant research results that deviate from reality due to the neglect of heterogeneity in the existing research,and also helps to take different measures to solve relevant problems through policies in the future.Thirdly,based on the comprehensive collection of the existing literature on consumption and finance,this paper re-deconstructs and systematically combs it according to its internal logic,and combs the traditional consumption theory based on consumption perspective and implicit financial factors,as well as the consumption finance theory based on financial perspective and from financial business products to residents’ consumption behavior from the perspective of consumption and finance.It also makes comments according to the two conclusions and views of positive promotion and negative inhibition,constructs the logical framework of this paper in the debate related to the review,effectively expands the theoretical literature on household consumption and the development of financial market,and forms a clear literature system of logical lines and theoretical context.Fourth,the existing research on financial development and residents’ consumption,or based on the macro concept of residents’ sector consumption,household disposable income,financial business and other relevant macro statistical data,or based on the micro data of a single financial product or financial business.The analysis of this paper is mainly based on the first-hand large sample data of China’s household finance survey,covering 29 provinces and 355 districts and counties across the country.It has collected detailed micro information such as household demographic characteristics,assets and liabilities,income and expenditure,insurance protection,and more accurately reflected the complex and subtle multi-dimensional and multi-directional relationship between China’s financial market and household consumption.