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Household Financial Decision Making Amidst the COVID-19 Pandemic

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  • Pengpeng Yue
  • Aslihan Gizem Korkmaz
  • Haigang Zhou

Abstract

This paper investigates the impact of the COVID-19 pandemic on household investment decisions using a novel survey conducted by the Survey and Research Center for China Household Finance. We use linear probability and probit models to analyze the effects of COVID-19 at the household level. Our results show that households who know someone infected with COVID-19 lose confidence in the economy. They are more likely to change their risk behavior and become risk-averse. Further, COVID-19 increases the probability that a household will change its investment portfolio. More specifically, it causes a 9.15% decrease in the total investment amount.

Suggested Citation

  • Pengpeng Yue & Aslihan Gizem Korkmaz & Haigang Zhou, 2020. "Household Financial Decision Making Amidst the COVID-19 Pandemic," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2363-2377, August.
    • Handle: RePEc:mes:emfitr:v:56:y:2020:i:10:p:2363-2377
    DOI: 10.1080/1540496X.2020.1784717
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