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Political Background and Household Financial Asset Allocation in China

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  • Yongbo Ge
  • Hongyu Chen
  • Liping Zou
  • Zhuojun Zhou

Abstract

Political background is an important factor in determining the household economic behavior. Using 2014–2018 households panel data from the China Family Panel Studies (CFPS), we investigate the effects of political background on China’s household asset allocation behavior. We find that political background has a significant positive impact on the financial market participation. Mediation analysis indicates that political background leads to higher household wealth, better social capital, and fewer credit constraints, thus promotes households investments. Further analysis shows that the marginal impact of political background on household investment behavior is more significant in Eastern and urban areas. Our results contribute to the existing literature on the relationship between the political background and the household investment behavior, also enhancing the understanding of the household portfolio heterogeneity.

Suggested Citation

  • Yongbo Ge & Hongyu Chen & Liping Zou & Zhuojun Zhou, 2021. "Political Background and Household Financial Asset Allocation in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(4), pages 1232-1246, March.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:4:p:1232-1246
    DOI: 10.1080/1540496X.2020.1865147
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    Cited by:

    1. Xinxin Ma, 2022. "Medical Insurances and Financial Portfolio Choice," Springer Books, in: Public Medical Insurance Reforms in China, chapter 0, pages 193-215, Springer.
    2. Zhao, Tianrui & Chen, Kezheng & Wang, Qian & Luo, Chunyang, 2023. "Financial literacy, liquidity constraits and household risk asset allocation," Finance Research Letters, Elsevier, vol. 58(PC).
    3. Can Xu & Andreas Steiner, 2022. "Does Public Employment Affect Household Saving Rates? Evidence from Chinese Household Data," CESifo Working Paper Series 9741, CESifo.
    4. Xinxin Ma, 2023. "Internet Use and Risky Financial Market Participation: Evidence from China," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 15(2), pages 1-1, February.
    5. Feng Zhao & Youzhi Xiao, 2023. "Information Searching from New Media and Households’ Investment in Risky Assets: New Evidence from a Quasi-Natural Experiment," Sustainability, MDPI, vol. 15(4), pages 1-25, February.

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