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The Effect of House Price on Stock Market Participation in China: Evidence from the CHFS Microdata

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  • Xiaoyu Chen
  • Xiaohao Ji

Abstract

This is an empirical study on the effect of house price on stock market participation and its depths based on unique China Household Finance Survey (CHFS) data in 2011 and 2013 including 36,213 sample households. We mainly found that, with an increase of one thousand RMB per square meter in macrohouse price, the probability to participate in the stock market will increase by 5.4% before controlling for wealth effect and 2.84% afterwards, indicating the existence of wealth effect. The participation depths of the stock-total asset ratio are expected to decrease by 0.23%, and absolute stock asset is observed to decrease by 5.8 thousand RMB in response to one thousand RMB increase of per square meter house price. The effect of house price on participation decision is also related to housing area, and the negative effect of house price on stock market participation depths gets more intense with the increase of the stock-total asset ratio.

Suggested Citation

  • Xiaoyu Chen & Xiaohao Ji, 2017. "The Effect of House Price on Stock Market Participation in China: Evidence from the CHFS Microdata," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(5), pages 1030-1044, May.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:5:p:1030-1044
    DOI: 10.1080/1540496X.2016.1263794
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    Cited by:

    1. Zou, Jing & Deng, Xiaojun, 2019. "Financial literacy, housing value and household financial market participation: Evidence from urban China," China Economic Review, Elsevier, vol. 55(C), pages 52-66.
    2. Zhou, Xianbo & Li, Heyang, 2021. "Interaction and quadratic effects in probit model with endogenous regressors," Economics Letters, Elsevier, vol. 198(C).
    3. Chi-Wei Su & Xiao-Cui Yin & Hsu-Ling Chang & Hai-Gang Zhou, 2019. "Are the stock and real estate markets integrated in China?," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(4), pages 741-760, December.
    4. Fang, Guanfu & Li, Wei & Zhu, Ying, 2022. "The shadow of the epidemic: Long-term impacts of meningitis exposure on risk preference and behaviors," World Development, Elsevier, vol. 157(C).

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