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The Dual Effects of Housing on Portfolio Choices: Evidence from Urban China

Author

Listed:
  • Jianmei Zhao

    (China Academy of Public Finance and Public Policy, Central University of Finance and Economics)

  • Jiandong Li

    (Chinese Academy of Finance and Development, Central University of Finance and Economics)

Abstract

Finance literature regarding the role of housing on portfolio choices is controversial. Our study reconciles both positive and negative effects of housing on portfolio decisions in the context of China. Employing the China Household Finance Survey (CHFS) data, we find dual effects of housing on portfolio choices simultaneously. House value appreciation imposes positive effects on households' stock investment, whereas house-to-wealth ratio has adverse effects on households' investment on risky financial assets. Housing itself creates trade-off effects on households' portfolio choices.

Suggested Citation

  • Jianmei Zhao & Jiandong Li, 2017. "The Dual Effects of Housing on Portfolio Choices: Evidence from Urban China," Annals of Economics and Finance, Society for AEF, vol. 18(2), pages 253-276, November.
    • Handle: RePEc:cuf:journl:y:2017:v:18:i:2:zhao:li
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    References listed on IDEAS

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    Cited by:

    1. Jie Li & Sheng Li & Alice Y. Ouyang, 2023. "Housing and Wealth Inequality: The Role of Financial Market Participation," Annals of Economics and Finance, Society for AEF, vol. 24(1), pages 141-170, May.
    2. Jianmei Zhao & Lin Liu & Ruihan Liu, 2018. "How house price appreciation affects homeowners' labour force participation : Evidence from urban China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(2), pages 233-252, April.

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    More about this item

    Keywords

    Housing; Portfolio choice; Dual effects; Chinese housing reform;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand

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