China Household Finance Survey Research Articles

The Impact of Consumer Credit on Household Education Investment — Empirical Research Based on CHFS Data

This article employs the 2019 China Household Finance Survey data to empirically investigate the impact of consumer credit on household education investment. The research reveals that an increase in consumer credit significantly boosts household education investment. Furthermore, the study examines the mechanisms through which consumer credit influences this investment, identifying that it operates by affecting household consumption and total expenditure. The effects are particularly pronounced in households that are risk-averse and have higher incomes. This article offers fresh insights into the interplay between consumer credit, household consumption, and education investment, thereby suggesting new avenues for research on household education investment.

The influence and mechanism of female-headed households on household debt risk: empirical evidence from China

With the development of society, the number of female-headed households is on the rise. Based on the data from the China Household Finance Survey (CHFS) in 2019, this paper establishes a Tobit model to study the influence of female-headed households on household debt risk. Results indicate that female-headed households can substantially reduce household debt risk, and this conclusion still holds after overcoming endogeneity issues. Further tests on the mediating effect reveal that risk aversion and housing property holding have partial mediating effects and masking effects, respectively, in the path of female-headed households affecting household debt risk. In addition, the heterogeneity analysis indicates that the influence of female-headed households on household debt risk is more significant in third-tier cities, as well as in families without children, families without elderly members, and families with more than two elderly members. The conclusions of this paper provide a reference for the relevant policy measures to reduce household debt risk and promote gender equality.

Farmers’ cooperatives and smallholder farmers’ access to credit: Evidence from China

Farmers’ cooperatives serve as effective means of transforming smallholder farmers’ production methods in the process of agricultural modernization in developing countries. This paper aims to examine the credit effects of farmers’ cooperatives by employing a framework based on institutional finance theory. Based on the 2021 China Household Finance Survey data, an endogenous switching probit model is employed to explore the impact of cooperative membership on smallholder farmers’ access to credit. The research findings indicate the following: i) Farmers’ cooperatives possess information advantages, as financial institutions gain access to smallholder farmers’ information through the organized value chains of farmers’ cooperatives, leading to a direct reduction in transaction costs and an improvement in access to credit. ii) Farmers’ cooperatives can promote smallholder farmers’ agricultural investments, increase household income for smallholder farmers, enhance the liquidity of farmland, and further improve access to credit for smallholder farmers. Therefore, farmers’ cooperatives represent an inevitable trend in the agricultural modernization of developing countries. Rural financial institutions should alter their financial models and resolve adverse selection and moral hazard issues in the credit process through organizational approaches, thereby enhancing access to credit for smallholder farmers.

Study of the Nonlinear Effect of Debt Leverage on Household Financial Asset Allocation

Using data from the China Household Finance Survey (CHFS), this paper investigates whether there is a nonlinear effect of debt leverage on households' financial asset allocation. The study shows that debt leverage affects households' motivation to participate in the financial market and leads to a reduction in the efficiency of financial asset allocation, with a certain nonlinear effect on low-debt households. Further, this paper provides policy recommendations to address the issue of reducing the impact of debt risk on residents' asset allocation, which is important for realizing the growth of household wealth.

Social pension insurance and household risky asset investment: Evidence from China

Using the data from the 2013, 2015, and 2017 waves of the China Household Finance Survey, this paper explores the impact of participation in social pension insurance on household risky asset investment with the time-varying difference-in-difference model. The research findings indicate that, in urban areas, insured households are 2.3% more likely to invest in risky assets compared to uninsured households, and the share invested in risky assets is 0.8% higher. This positive effect is more pronounced for households with a higher level of risk preference. At the same time, there is no significant difference in the probability or proportion of risky assets allocation between insured and uninsured households in rural areas. These findings have important policy implications. When the government reforms the social pension insurance system or allocates public resources in the future, they can consider gradually breaking the dual urban-rural structure in the pension insurance system to alleviate concerns among rural households regarding uncertainties.

Financial inclusion toward economic inclusion: empirical evidence from China’s rural household

PurposeFocusing on micro-level indicators, we investigate financial inclusion levels in rural China, examining its determinants and impact on household welfare. We construct a financial inclusion index of four essential financial services: savings, digital payments, credit and insurance. We identify factors influencing financial inclusion among Chinese rural households and assess the effects of financial inclusion on household welfare.Design/methodology/approachWith the entropy method, we use data from the 2019 China Household Finance Survey to assess financial inclusion levels in rural China. Determinants and their impact on welfare are analyzed through probit and ordinary least squares models, respectively. Propensity scoring matching is applied to address potential endogeneity.FindingsWe reveal that rural households exhibit limited usage of formal financial services, with notable regional disparities. The eastern region enjoys the highest financial inclusion and the central region lags behind. Household characteristics such as family size, education level of the household head, income, employment status and financial literacy significantly influence financial inclusion. Financial inclusion positively impacts household welfare as indicated by household consumption expenditure. The use of different types of financial services is crucial with varying but significant effects on household welfare.Originality/valueThis study offers valuable insights into China’s rural financial inclusion progress, highlighting potential barriers and guiding government actions.

China cross-border e-commerce comprehensive pilot zone and urban residents' tourism consumption: empirical study based on CHFS data

In this study, we examine the impact of China's cross-border e-commerce pilot zones on urban residents' tourism consumption. It also examines the underlying mechanism of this impact using data from the China Household Finance Survey. The research indicates that creating China cross-border e-commerce pilot zones substantially impacts increasing tourism consumption among urban inhabitants. Furthermore, using cash payment methods and risk preferences is beneficial in influencing this effect. This research employs an econometric model and performs endogeneity analysis to confirm the reliability of the findings and explore the mechanism of influence. This study enhances the existing theory on cross-border e-commerce and consumer behavior, offering valuable insights for supporting the sustainable growth of cross-border e-commerce and optimizing the structure of tourism consumption.

Moving up toward sustainable development: Digital finance and income mobility

AbstractThe fact that financial exclusion leads to income inequality is detrimental to sustainable economic growth. Digital finance facilitates the provision of financial services to poor people and has the potential to promote income mobility so that to reduce income inequality. This study uses the Digital Financial Inclusion Index and household data from the China Household Finance Survey to examine the association between digital finance and households’ income mobility. Results show a significantly positive association between digital finance and upward income mobility. Underlying mechanism analyses suggest that digital finance is positively associated with upward mobility through the channels of equal opportunity and financial capability. Further heterogeneous analyses find that asset, education, and age can be moderators in the relationship between digital finance and income mobility. The findings demonstrate the importance of digital finance in promoting the income mobility of disadvantaged people and achieving the goal of inclusive and sustainable development.

Local earthquakes and households’ risk-taking: Evidence from the China Household Finance Survey

Local earthquakes and households’ risk-taking: Evidence from the China Household Finance Survey

Financial literacy and household financial resilience

Rising uncertainty has drawn researchers’ attention towards households’ anti-risk capacities. Using data from the China Household Finance Survey covering 2019 to 2021, this study investigates the impact of financial literacy on household financial resilience. We measure household financial resilience by analyzing inter-period variations in liquid assets pre- and post-Covid-19, coupled with constructing a sensitivity index. Our analysis indicates that financial literacy significantly enhances financial resilience through the wealth effect and risk mitigation effect. This study highlights the critical role of financial literacy in mitigating risks and accelerating recovery from financial disturbances.

Balancing the scales: How housing supply regulation shapes household wealth inequality in China

Given its significant implications for the economy and society, this paper investigates the impact of housing supply regulation on household wealth inequality. Utilizing data from the China Household Finance Survey and land transaction records spanning from 2013 to 2019, we employ recentered influence function regression and two-way fixed effects models to analyze the effect of unexpected housing supply shocks on the wealth gap among households. Our findings reveal that positive unexpected housing supply shocks are crucial in reducing household wealth inequality. This reduction is attributed to the heterogeneous impacts of housing supply regulation on different wealth groups. By deregulating the housing supply, the upward trend in housing prices has slowed, which in turn makes homeownership more accessible and facilitates wealth accumulation for households that fall within the 20 % and 80 % wealth quantiles. Conversely, deregulation has a negative impact on property values for households in the 80–100 % wealth quantile, thus mitigating their overall wealth growth. Overall, this study emphasizes the significant role of housing supply regulation in shaping wealth inequality in China.

Bank competition and household informal credit

This study examines the relationship between bank competition and informal household credit. Using data from four rounds of the China Household Finance Survey (CHFS), we find that increased competition among banks significantly reduces households' use of informal credit. To establish causality, we create a quasi-natural experiment based on the relaxation policy for city commercial bank branch expansion and obtain consistent results. We further uncover two mechanisms through which bank competition affects informal credit use: reducing interest rates on formal loans and improving financial literacy among households. Moreover, the heterogeneous analysis shows that higher-income and asset-rich households, as well as those residing in urban areas, are more negatively affected by bank competition in terms of informal credit access, whereas its influence on informal credit in agricultural production and medical expenses for households is not statistically significant. Overall, the results imply that fostering moderate competition in the banking industry can diminish the reliance on informal credit markets and offer a more comprehensive understanding of the relationship between the banking sector and household credit.

What affects the financial asset allocation of the elderly? From the perspective of financial literacy and risk attitude

Using data from the 2019 China Household Finance Survey, this study investigates the impact of financial literacy and risk attitude on pension asset allocation in the context of population aging. It can not only provide new research perspectives, but also provide support for the government to promote the improvement of the pension security system. We find that population ageing can inhibit residents’ pension financial asset allocation, with residents’ risk attitudes and financial literacy playing a significant mediating effect. Heterogeneity analysis shows that the inhibiting effect of population ageing on pension financial asset allocation is stronger in the eastern and rural areas.

Risk perception, risk preference and farmers’ indifference in grain sales

ABSTRACT This paper examines the mechanisms by which risk perception affects farmers’ timing of grain sales and the role played by risk preference based on 2019 China Family Database and China Household Finance Survey. The results indicate that high risk perception is more likely to lead farmers to current sales compared with intertemporal sales. It reveals that the underlying reason for farmers’ indifference in grain sales is the increased risk perception under constraints, which causes risky returns from intertemporal sales lower than certain returns from current sales in utility comparison. It is further found that risk preference has a substitution effect on risk perception in farmers’ intertemporal grain sales.

Unveiling the impact of housing debt on entrepreneurship: Evidence from China

AbstractDespite extensive research on the impact of various factors on entrepreneurship, the role of housing debt remains underexplored, particularly in emerging economies. Using data from the China Household Finance Survey (CHFS), this study identifies a significant negative effect of housing debt on entrepreneurship after controlling for a comprehensive set of individual and household characteristics, as well as regional and year fixed effects. To delve deeper into the underlying mechanisms, we present direct evidence that housing debt amplifies risk aversion while imposing capital and credit constraints. Furthermore, we offer indirect evidence suggesting that housing debt exerts a stronger negative impact on employer entrepreneurship than on self‐employment entrepreneurship, and a more pronounced negative effect on active entrepreneurship compared to passive entrepreneurship. Overall, this study addresses gaps in research on the impact of housing debt on entrepreneurship and provides insights into the underlying mechanisms by revealing how housing debt amplifies risk aversion, imposes capital and credit constraints, and disproportionately affects employer entrepreneurship over self‐employment entrepreneurship, as well as active entrepreneurship over passive entrepreneurship.

Financial availability and rural household asset allocation

This paper uses the survey data from the China Household Finance Survey and Research Center (CHFS) in 2017, 2019, and 2021 as the research sample for the study. It explores whether financial availability affects household asset allocation from a micro perspective. The study finds that both traditional and internet financial availability can significantly promote household participation in financial markets; increased financial availability can promote household participation in allocating to insurance and real estate; internet financial availability affects household asset allocation by affecting credit demand, and traditional financial availability affects household asset allocation by affecting household income.

Impact assessment of poverty alleviation on carbon inequality: evidence from households in China

Inequality and climate change are major challenges for sustainable development, but a dilemma between the objectives has been widely observed. Based on the panel data of China Household Finance Survey (CHFS), inequality in carbon emissions across income groups is witnessed, which provides basics for the study. From a quasi-natural experiment, an increase of 9.9% in household per capita carbon emissions (HCEs) of the impoverished group is found after the Targeted Poverty Alleviation policies (TPA) in China, providing evidence for the enhancement of poverty alleviation measures on equal right for household carbon emissions. Specifically, dual mechanism of transfer payments and employment assistance acting as direct and indirect strategies to enhance family wealth are examined as the pathways to carbon equality. Further, a decline in household carbon emission intensity in the impoverished group is also observed after the treatment, which implies the accelerating role of TPA in low-carbon lifestyle formulation for the impoverished families. The findings of this paper confirm the positive effect of TPA policies on carbon equality for households, and also refute the "equality-pollution dilemma", which provide insights for policy makers in formulating equitable decarbonization policies and allocating the carbon budget.

Identifying the employment effect of county‐city merger in China

AbstractThis paper draws upon a quasi‐natural experiment of county‐city mergers in China to examine whether state‐led urbanisation makes a difference in local labour markets. Based on the difference‐in‐differences framework and three waves of data from the China Household Finance Survey, we show that, on the urban fringe, residents' probability of working in nonagricultural sectors increased by 6.69 percentage points after the policy. Residents responded mainly by shifts from the agriculture sector to being self‐employed. The results indicate that, after fringe counties connect to the corresponding big city in substance, residents in peripheral areas could benefit from the positive spillover effect from large cities and gain employment.

The impact of the investment expectation gap on households’ risky financial asset investment

Rational household asset allocation is crucial for the accumulation of household wealth. However, there is still a widespread phenomenon of limited participation among households. This paper aims to explore the impact of the investment expectation gap on households’ risky financial asset investment. Utilizing data from the China Household Finance Survey 2019, this paper systematically investigates the role of the investment expectation gap in risky financial asset investment through the Probit and Tobit models. The study reveals that the investment expectation gap has a significant negative impact on the investment probability (Average Marginal Effect, –0.118, p < 0.01) and holding proportion (β, –0.082, p < 0.01) of household investment in risky financial assets. This conclusion remains robust after conducting robustness tests by replacing the explanatory variable and performing subsample tests and endogenous treatment. The analysis of transmission mechanisms revealed that an expanding of the investment expectation gap would concurrently result in a decline in households’ assessment of stock’s profitability (Average Marginal Effect, –0.080, p < 0.01), the satisfaction with current asset allocation (β, –0.167, p < 0.05), and the subjective well-being of household members (β, –0.289, p < 0.01). Furthermore, the investment expectation gap not only hampers household investment in risky financial asset, but also diminish the household savings rate (β, –0.055, p < 0.01). This study demonstrates that helping households form reasonable expectations for risky financial assets investment returns will contribute to diversifying household asset allocation and enhancing satisfaction with investment decisions. AcknowledgmentThis study is funded by the Chongqing Social Science Planning Fund, grant number (2021BS052).

The Impact of Curbing Housing Speculation on Household Entrepreneurship in China

We document a speculation channel and complement the well-documented collateral channels by offering novel evidence about the effect of curbing housing speculation policies We estimate the positive effect of discouraging housing speculation on household entrepreneurship in China. By exploiting the city-level variations in the stringency of home purchase restrictions between 2011 and 2019 and five waves of China Household Finance Survey (CHFS) data, we find that discouraging housing speculation significantly increases the likelihood of local households starting a business. To address endogeneity concerns, we exploit plausibly exogenous variation using IV estimations and DID research design. The positive effect is stronger for local multiple-home owners, homeowners without mortgage debt, households with previous entrepreneurial experience, households of risk-loving, and households with large assets. This conclusion is robust with city-level evidence. In the mechanism discussion, we find that discouraging housing speculation significantly reduces the likelihood and the plans of local households to purchase new homes and lowers the house price expectations of local households (thus the opportunity cost of starting a business). We also provide evidence supporting the view that discouraging housing speculation increases entrepreneurial opportunities, innovative development, and local households’ social network investments, all of which contribute to starting a business. The results imply that policies to curb housing speculation can lead to beneficial spillover on entrepreneurship and the local economy, as well as contribute to the sustainability of economic growth.