Abstract
It is a general rule that households will pay significantly more attention to management of family assets since their income has experienced a continuous increase, and Chinese families are no exception. With the Opening and liberalization of financial market in China, policies about financial inclusive service are put forward after the first decade of the 21<sup>st</sup> century to support household finance. However, there are still rooms for improvement in the implement of the policy. It is still not very clear that how we can enhance its supposed role in family financial decisions and whether it has equal utility to household in various financial conditions and characters. So research must be made to better evaluate the effect of inclusive finance and help promoting its development. Based on 2017 Chinese Household Financial Survey (CHFS) data, the choices of household financial allocation including the possibility of risk financial market participation and the proportion of risk financial assets held by households are studied. By using factor analysis to combine both traditional and digital factors, a new inclusive finance index is calculated and the fact that inclusive finance can increase the possibility of household risk financial market participation is further proved. Moreover, by subdividing the sample, it is found that the utility of inclusive finance is greater in rural areas, among low-income households and in central and western China, and that the utility in urban areas is determined by household age structure, income level and financial literacy. As to the influence mechanism, inclusive finance can change household’s choice of asset allocation by increasing their financial literacy, which is measured by related questions from the questionnaire. Since inclusive finance is widely confirmed to promote the rational allocation of financial assets, the development of inclusive finance in rural areas, among low-income households and in central and western China should be more primarily supported to better tap their potential in financial sector, while the development in urban areas should be processed together with the increase of income and the popularized of financial knowledge.
Highlights
Chinese Household Financial Survey, initiated by Southwestern University of Finance and Economics in 2011, shows that though the general participation rate is still relatively low, the risk financial market participation of Chinese household is increasing
Based on the Chinese family financial investigation (CHFS) in 2017, the latest data, combining both digital Internet factors such as the Internet reason property balance and traditional sense of financial indicators which used to measure the level of inclusive finance, using Probit and Tobit model to study the influence of inclusive finance on household risk assets allocation and analyze its effect mechanism from the differences between levels of Income differences and regions, this paper further proves that the utility of inclusive finance in rural area, central and western China and other relatively less developed regions
This paper studies the impact of inclusive finance on household financial asset selection with a different inclusive finance index, proves the influence of inclusive finance on household financial asset allocation, recognizes factors which should be taken seriously while developing inclusive finance and gives out suggestions
Summary
Chinese Household Financial Survey, initiated by Southwestern University of Finance and Economics in 2011, shows that though the general participation rate is still relatively low, the risk financial market participation of Chinese household is increasing. Existing studies have shown that family financial asset selection is related to family size, age, education level, health status, marital status, financial knowledge and other family natural characteristics, and is related to social factors such as social insurance, relationship network, Internet popularity, and so on. These factors, especially social and economic factors, are closely related to inclusive finance.
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