Abstract
This paper explores the impact of medical insurance on the possibility of household participation in the stock market and the portfolio share of equity, applying Probit, and Tobit models with the data from China Household Finance Survey (CHFS). The empirical results highlight that participating in medical insurance can significantly increase the possibility of households participating in the stock market and the portfolio share of equity, and have passed the robustness tests, including propensity score matching (PSM), altering estimation methods, replacing explained variables, and eliminating samples. Besides, heterogeneity analysis shows that the impact of medical insurance on household stock market participation is more significant in eastern region, urban areas, and households with higher income level. Further mechanism analysis implies that household participation in medical insurance mainly affects their stock market participation through preventive savings effect. It is necessary to improve the medical insurance system and encourage household participation in stock market so as to further promote financial development in China.
Highlights
This paper aims to explore whether the possibility of household participation in the stock market responds to medical insurance, and how the participation in medical insurance affects the portfolio share of equity
This paper uses the data from China Household Finance Survey (CHFS) in 2015 to study the relationship between household participation in medical insurance and the possibility of household participation in stock market and the proportion of equity asset
The results show that household participation in medical insurance significantly promotes the possibility of household participation in the stock market and the proportion of equity asset, and mainly through the preventive savings effect
Summary
This paper aims to explore whether the possibility of household participation in the stock market responds to medical insurance, and how the participation in medical insurance affects the portfolio share of equity. China has a distinct dual economic structure and unbalanced regional economic development; household stock market participation has shown limited and unbalanced characteristics [1]. These two features have adverse effect on the preservation and appreciation of household wealth, as well as affect the diversified development of Chinese financial market
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