Empirical Study On Savings-investment Transformattion Rrate Andits Regional Differences In China

In the process of national economic development, capital formation and capitalaccumulation is the source of one country’s economic growth, whereas the capitalformation relies heavily on the level of savings, the scale of savings, and theefficiency of savings—investment transformation. Being in the economictransformation period, China is faced with high savings rate, unbalanced savingsstructure, growing savings gap and low-efficiency investment. Besides, the disparityof economic development between eastern, central and western China is increasinglywidening, among which high savings rate and high investment rate have made vitalcontributions to the economic development of the East. Because of thesebackgrounds, it is of crucial significance to conduct the analysis of China’s savings,China’s investment, and the regional differences of savings-investmenttransformation rates among eastern, central and western China. By setting up andestimating the time series model and random coefficient panel data model and byapplying relative theories like the unit root test and cointegration test, this thesisattempts to carry out a study on the savings-investment transformation rate in China.This paper first gives an overview of relative theories about savings andinvestment, in which main savings-investment conversion mechanism is introducedand the functions and meanings of savings-investment transformation rate areanalyzed; it further elaborates the evolution course of China’s savings-investmenttransformation and analyzes its current situation and problems; it is next followed byrespective empirical research about the overall level of the savings-investmenttransformation rate in China, the differences of savings-investment transformationrate between31provinces and cities located at eastern, central and western China, aswell as the correlation between the savings-investment transformation rate andeconomic growth; it then analyzes the reasons for the empirical research’s resultsand proposes some specific policy suggestions; it lastly presents the conclusion ofthe study in this thesis. The conclusions of this paper are as follows:(1)The overall level ofsavings-investment transformation rate in China is relatively of low efficiency.(2)There are rather vast regional disparity of savings-investment transformation ratebetween31provinces and cities in the eastern, central and western China.(3) Ahigher savings-investment transformation rate spectacularly promotes the region’seconomic growth.(4)The reasons for low savings-investment transformationefficiency in China and its wide regional disparity lie mainly in the unbalancedsavings structure, imperfect financial market, distorted interest rate, unsound socialsecurity system, etc. As a result, this article puts forward some policies andsuggestions for the perfection of savings-investment conversion mechanism from thefollowing aspects: perfecting the financial market, propelling the marketizationreform of interest rate, executing regional financial market and regional interest ratepolicy, increasing the expenditure for social security system in central and westernChina, and so on.The innovations of this thesis consist in the fact that the random coefficientpanel data model is employed in the analysis of regional savings-investmenttransformation efficiency, which enlarges the study framework and can thus reflectthe concrete economic situation of China more clearly. Moreover, its conclusionsdrawn from the horizontal comparative analysis of economic data from31provincesand cities in the eastern, central and western China are more reliable and convincing.In addition, it also explores the correlation between the savings-investmenttransformation rate and the economic growth rate, endowing the savings-investmenttransformation rate with a more explicit economic connotation.