FINANCIAL AVAILABILITY, INCOME GAP AND HOUSEHOLD CONSUMPTION RATE IN TRANSITIONAL CHINA: A THEORETICAL APPROACH AND EMPIRICAL TEST

Nianzhi Guo, Hai-Tao Tsao and Di Zhao
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Nianzhi Guo: Newhuadu Business School, Minjiang University, P. R. China
Hai-Tao Tsao: School of Economics and Management, Minjiang University, P. R. China
Di Zhao: ��School of Economics and Management, Xiamen University of Technology, P. R. China

The Singapore Economic Review (SER), 2025, vol. 70, issue 02, 303-323

Abstract: Based on the characteristics of financial exclusion and income gap, this paper attempted to elucidate the fluctuation of China’s consumption rate through the mechanism of financial availability of low-income residents and its influence on household consumption in the reform era. The study showed that improving financial availability affects the consumption rate by increasing investment opportunities for low-income earners who can adjust the portfolio of composition. Meanwhile, this effect is affected by the income gap which plays a “threshold†role in the relationship between financial availability and consumption rate. Therefore, inclusive finance development must be adapted to economic development in order to prevent “too much finance†.

Keywords: Financial exclusion; financial availability; income gap; household consumption rate; China (search for similar items in EconPapers)
JEL-codes: E21 G11 G28 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S0217590821500247

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