The consumption response to household leverage in China: The role of investment at household level

Dongyang Zhang and Rui Guo

International Review of Financial Analysis, 2020, vol. 71, issue C

Abstract: This paper examines whether leverage can improve household consumption and facilitate the consumption upgrading in China. By employing two rounds of Chinese household surveys, our econometric results show that, while household leverage can increase the level of total household consumption expenditures, it can not significantly drive consumption upgrading. Moreover, we explore the impact of household investment factors on the relationship between leverage and consumption. We find that investment exerts a crowding-out effect, while the joint effect of household investment and income can facilitate the relationship between leverage and household consumption since income factors can serve as compensation. Overall, this paper provides new evidence in the context of emerging markets, offering a more comprehensive understanding the relationship between household leverage and consumption.

Keywords: Household leverage; Household consumption; Investment crowd-out; Income compensation (search for similar items in EconPapers)
JEL-codes: D10 D12 D14 D15 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521920302246
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:71:y:2020:i:c:s1057521920302246

DOI: 10.1016/j.irfa.2020.101580

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().