The Research On The Relationship Between China’s Consumer Credit And Economic Growth

Since the outbreak of the Subprime Mortgage Crisis, because of the depression of investment and export trade, then their roles in boosting the economic growth are smaller. So, the economic growth need to be pulled through domestic demand, and the role of consumption is more important. Since the late1990s, China’s consumer credit has begun to grow rapidly. In1997, the government issued many policies to encourage the development of consumer credit, which was used to ease the slow development of economic owing to the reduction of the export trade. As is referred in China’s government working report of2012,"Expanding the domestic demand, especially consumer demand is the fundamental standpoint of the long-term stable and rapid development of China’s economic and is the key work of this year. Strive to expand consumption demand, and accelerate the establishment of a long-term mechanism to expand consumption.…Perfect the consumer policy.…Expand the consumer credit etc." And the development of consumer credit is one of the important means, which is a way to stimulate the consumption. Up to2011, China’s consumer credit balance increased more than500times, from17.2trillion in1997to8,871.69trillion in2011.Though China’s consumer credit has had a big development, it has a big disparity with the western countries, and has many restricting factors from the analysis of the status quo. In theory, the growth of consumer credit could promote the increase of the consumption demand, then the growth of economic. But in reality, whether the growth of consumer credit could boost the growth of economic and the size of the role in boosting the economic is the most important problem to study of this paper.A combination of theoretical and empirical research methods are used to illustrate the relationship between the consumer credit and the economic growth. Then, according to the status quo and restricting factors of China’s consumer credit, this paper also discusses the specific suggestions that promote the economic growth. The main details are as follow: The first part firstly introduces the background and significance to choose this theme, and particularly discusses the research status of consumer credit of the domestic and foreign scholars. The research of the foreign scholars started relatively earlier, and mostly used the empirical method. But China’s research on consumer credit started later, and mostly focuses on the policy study, whereas the theoretical and empirical research were both less.The second part analyzes the theory of the relationship between consumer credit and the economic growth. First of all, explaining the basic meaning of consumer credit; secondly, analyzing the consumption function theory, and discussing the consumer credit theory from the perspective of the utility theory; thirdly, analyzing the theory of the relationship between consumer credit and the economic growth; finally, analyzing the theory of the relationship between consumer credit and the economic growth, as the foundation of the following analysis.The third part is the status quo of the consumer credit, introducing the development of China’s consumer credit from three aspects—amount, structure and environment of consumer credit.The fourth part is the empirical research of the relationship between the consumer credit and economic growth. This paper firstly selects the quarterly data about the consumer credit balance, GDP, the disposable income of urban residents, he consumer price index, money supply from the first quarter of2001to the first quarter of2012, then, establishes the VAR model according to the data. Firstly, we use the adjusted quarterly data to the unit test of ADF and Johansen co-integration test, and get the long-term relationship between consumer credit and economic growth.; Secondly, we use the granger causality test to test the five variables, then eliminate the influence of CPI according to the test results.; thirdly, establishing the VAR model and to estimate.; finally, analyzing the effect by impulse and variance decomposition, and giving the specific analysis result of the relationship between the consumer credit and economic growth.The fifth part analyses the restricting factors of China’s consumer credit development according to the status quo of the consumer credit of the third part and the outcome of the empirical research of the fourth part.The sixth part gives the development suggestions of China’s consumer credit from three aspects according to the status quo. Firstly, about the system and environment, we need to perfect the social security system and personal credit system, speed up the construction of the relevant laws and regulations and perfect our secondary market of consumer credit; secondly, about the supply of consumer credit, we need to establish special operating agency of consumer credit, speed up the product innovation and perfect the risk management mechanism; finally, about the home-textile camp, we need to raise residents’disposable income and commitment shall ability, and promote the transformation of the notion of residents’ consumption.The seventh part is the conclusion of this paper.