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Chinese household finance impacted by climate change - Evidence from stock investment

Author

Listed:
  • Chen, Yanyun
  • Liu, XiangYu
  • Yao, Ziyan
  • Tang, Xiaoping

Abstract

This paper conducts an empirical analysis using data from a survey of Chinese household finance and prefecture-level data of historical temperature. The results show that the impact of temperature fluctuations on household financial behavior reveals a U-shaped relationship, with the inflection point of temperature fluctuations located at 0.5463 °C. The part before the inflection point of the "U" relationship is mainly due to the change in investor mood caused by climate change, which has a negative effect on investment intention. The part after the inflection point is mainly because the rise in temperature significantly increases investors' risk appetite, leading to an increase in investors' willingness to enter the market. The positive effect is greater than the negative one, which leads to an increase in the share of equities in total financial assets. Moreover, we confirm that the household savings level strengthens the inhibition effect of climate change on household financial behavior, while the education level weakens the inhibition effect of climate change on household financial behavior.

Suggested Citation

  • Chen, Yanyun & Liu, XiangYu & Yao, Ziyan & Tang, Xiaoping, 2025. "Chinese household finance impacted by climate change - Evidence from stock investment," International Review of Economics & Finance, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:reveco:v:97:y:2025:i:c:s1059056024007226
    DOI: 10.1016/j.iref.2024.103730
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    More about this item

    Keywords

    Climate change; Household finance; Risk appetite; Stock investment; Investor mood;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • N55 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Asia including Middle East
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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