An Economic Effect Analysis of the Sectoral Structure of Credit Loans

This paper studies the effect on the economic growth and inflation brought about by credit loans extended in different sectors since 2007 in China using the co-integration test, the VAR model and the impulse-response analysis. The result shows that loans as a whole have no significant effect on CPI in the short term, but have positive one in the long run; it also shows that the aggregate loans have significant and persistent positive effect on GDP. When categorizing loans by sector into loans to residents and loans to enterprises, we found that loans to residents have significant and immediate positive effect in the short run, but their impact will taper in the long run. In the short term, loans to enterprises have negative effect; however, in the long run, they have positive effect. They also have persistent positive effect on GDP. All these phenomena have been given reasonable economic explanations in this paper.