Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Chinese Credit Card Usage Growing Quickly

29.08.2012
Lack of knowledge of credit risks could create future problem

In the past two decades, the Chinese economy has undergone many drastic reforms in an effort to compete more effectively on the international market.

These reforms included allowing foreign banks to offer credit cards to Chinese citizens. Now, researchers at the University of Missouri have found about 30 percent of Chinese urban households now own at least one credit card and the growth rate of credit card adoption has been an average of 40 percent per year between 2004 and 2009.

Rui Yao, an assistant professor of personal financial planning in the College of Human Environmental Sciences at MU, says that this large growth in such a small amount of time has positive and negative implications for the Chinese economy.

“With more and more people taking advantage of credit in China, it certainly increases potential consumer buying power,” Yao said. “However, we found that more than 90 percent of non-credit card users were unaware of safety issues inherent in credit card use and more than 60 percent had little knowledge of the consequences of credit card default. This lack of knowledge could create problems as credit card ownership is expected to grow at a rate of 11 percent a year.”

Yao studied data from the 2008 Survey of Chinese Consumer Finance and Investor Education conducted by Tsinghua University in China and found that a large portion of new Chinese credit card holders are very young.

“We found that 58 percent of Chinese credit card holders are younger than 35, while only 3.3 percent of card holders are older than 50,” Yao said. “This result may reflect some unique aspects of the Chinese culture. The concepts of credit and debt are quite contrary to the principles of Confucianism, so it may take a while for older Chinese citizens to adopt those concepts.”

Yao found that while 72 percent of Chinese credit card holders were never late on their payments, only 55 percent were able to pay the full balance. She also found that 70 percent of Chinese credit card holders said that credit cards contributed to overspending.

Yao believes the Chinese could benefit from financial education designed to help them plan for their financial future in a manner consistent with Chinese cultural values. Yao believes encouraging the Chinese to take advantage of debt in a responsible fashion is important for the Chinese economy.

“Not using debt is a strength because it enables the Chinese economy to build a strong financial base that is not threatened by excessive amounts of consumer debt or subject to loss in uncertain financial times,” Yao said. “However, it may be a weakness if it limits consumption. Appropriate use of debt can help households improve their quality of life as well as spur economic growth through an increase in market purchases.”

This study was published in the Journal of Family and Economic Issues.

Nathan Hurst | EurekAlert!
Further information:
http://www.missouri.edu

More articles from Studies and Analyses:

nachricht Real-time feedback helps save energy and water
08.02.2017 | Otto-Friedrich-Universität Bamberg

nachricht The Great Unknown: Risk-Taking Behavior in Adolescents
19.01.2017 | Max-Planck-Institut für Bildungsforschung

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Safe glide at total engine failure with ELA-inside

On January 15, 2009, Chesley B. Sullenberger was celebrated world-wide: after the two engines had failed due to bird strike, he and his flight crew succeeded after a glide flight with an Airbus A320 in ditching on the Hudson River. All 155 people on board were saved.

On January 15, 2009, Chesley B. Sullenberger was celebrated world-wide: after the two engines had failed due to bird strike, he and his flight crew succeeded...

Im Focus: Breakthrough with a chain of gold atoms

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

Im Focus: DNA repair: a new letter in the cell alphabet

Results reveal how discoveries may be hidden in scientific “blind spots”

Cells need to repair damaged DNA in our genes to prevent the development of cancer and other diseases. Our cells therefore activate and send “repair-proteins”...

Im Focus: Dresdner scientists print tomorrow’s world

The Fraunhofer IWS Dresden and Technische Universität Dresden inaugurated their jointly operated Center for Additive Manufacturing Dresden (AMCD) with a festive ceremony on February 7, 2017. Scientists from various disciplines perform research on materials, additive manufacturing processes and innovative technologies, which build up components in a layer by layer process. This technology opens up new horizons for component design and combinations of functions. For example during fabrication, electrical conductors and sensors are already able to be additively manufactured into components. They provide information about stress conditions of a product during operation.

The 3D-printing technology, or additive manufacturing as it is often called, has long made the step out of scientific research laboratories into industrial...

Im Focus: Mimicking nature's cellular architectures via 3-D printing

Research offers new level of control over the structure of 3-D printed materials

Nature does amazing things with limited design materials. Grass, for example, can support its own weight, resist strong wind loads, and recover after being...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Booth and panel discussion – The Lindau Nobel Laureate Meetings at the AAAS 2017 Annual Meeting

13.02.2017 | Event News

Complex Loading versus Hidden Reserves

10.02.2017 | Event News

International Conference on Crystal Growth in Freiburg

09.02.2017 | Event News

 
Latest News

New pop-up strategy inspired by cuts, not folds

27.02.2017 | Materials Sciences

Sandia uses confined nanoparticles to improve hydrogen storage materials performance

27.02.2017 | Interdisciplinary Research

Decoding the genome's cryptic language

27.02.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>