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Brothers, household financial markets and savings rate in China

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  • Zhou, Weina

Abstract

This study analyzes the effect of the number of brothers an individual has on that individual's household savings rate under the current underdeveloped household financial market in urban China. I show that having an additional brother reduces an individual's household savings rate by at least 5 percentage points. Brothers help households (1) by sharing risks, providing a source of informal borrowing, and (2) by sharing the cost of supporting parents. Sisters play a minor role in affecting a household's savings rate, mainly because of cultural norms. The decline in the average number of brothers in households induced by population policies explained at least one-third of the increased aggregate household savings rate in urban China.

Suggested Citation

  • Zhou, Weina, 2014. "Brothers, household financial markets and savings rate in China," Journal of Development Economics, Elsevier, vol. 111(C), pages 34-47.
    • Handle: RePEc:eee:deveco:v:111:y:2014:i:c:p:34-47
    DOI: 10.1016/j.jdeveco.2014.07.002
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