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Liquidity Constraints, Internet Finance and China Household Consumption
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TitleLiquidity Constraints, Internet Finance and China Household Consumption  
AuthorYin zhichao, Pan beixiao and Ni jinlan  
OrganizationCapital University of Economics and Business; University of Nebraska at Omaha; Nanjing Audit University;; 
Key WordsLiquidity Constraints; Internet Finance; Financial Inclusion; Household Consumption 
AbstractBased on China Household Finance Survey (CHFS) data, through two-stage least square (2SLS) regression analysis, this paper finds that liquidity constraints extremely reduce household consumption. When households have Internet finance, the negative effect of liquidity constraints on consumption can be alleviated effectively. That is to say, Internet finance has eased negative impact of liquidity constraints on consumption significantly. Further studies find that Internet finance has reduced the probability of household being liquidity constrained significantly and alleviated the problem of liquidity constraints. To households who are constrained to apply for housing loans, auto loans or credit cards, internet finance is able to alleviate their liquidity constraints problem effectively, and promote their consumption directly. According to consumption structure, internet finance can effectively ease the negative impact of liquidity constraints on remaining 7 types of household consumption except health care. This paper shows that liquidity constraint has a great inhibitory effect on household consumption, but internet finance can ease this impact effectively. Therefore, popularizing Internet payment tools which include third party payment tools, developing internet finance can become an important reference to alleviate household liquidity constraints and stimulate consumption in the future. 
Serial NumberWP1329 
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