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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front. Econ. China    2006, Vol. 1 Issue (1) : 112-125    https://doi.org/10.1007/s11459-005-0012-z
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Risks, Financing Constraints, and High Savings Ratio in the Rural Economy of China: A Model Incorporating Precautionary Savings and Liquidity Constraints
MA Junlu, TIAN Gang
Department of Finance, School of Economics, Nankai University, Tianjin 300071, PRC;
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Abstract This paper makes an in-depth investigation on the phenomenon of high savings rate in the rural economy of China between 1978 and 2003. On the basis of precautionary savings theory, we construct a model incorporating the risks, liquidity constrains, and aging population to explain the existence of high savings rate in the rural economy of China. We measure risks with Gini coefficient and marginal propensity to save. We find that these risk indices are positively associated with the higher savings rate and the higher degree of prudence of rural households. Our findings pose an urgency of the reform of rural financial system and the improvement in social security system in the rural economy of China.
Issue Date: 05 March 2006
 Cite this article:   
TIAN Gang,MA Junlu. Risks, Financing Constraints, and High Savings Ratio in the Rural Economy of China: A Model Incorporating Precautionary Savings and Liquidity Constraints[J]. Front. Econ. China, 2006, 1(1): 112-125.
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http://academic.hep.com.cn/fec/EN/10.1007/s11459-005-0012-z
http://academic.hep.com.cn/fec/EN/Y2006/V1/I1/112
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