The Research of Chinese Home Bias

Abstract

The study takes 19964 investors from Shanghai, Tianjin and Dalian as samples to prove that there really is home bias with Chinese investors. Under controlling the Urban per disposable income, the paper uses the multinomial logistic model, takes the proportion of holding stock, the cumulative time in the market, age and sex as explanatory variables to detail home basis grade value, and also analyzes the impact of risk aversion level, investment experience, sophistication and sex on home basis. Finally, we conclude that the young investors with high level of risk aversion, investment experience and sophistication shortage are more likely home bias; and also the male is more likely home bias than female. The different judgments of risk and benefit caused by the investors' individual differences, such as risk aversion, investment experience, sophistication, age and sex, may be one reason of home bias.