Household Stock Research Articles

The Impact Study of Mobile Payment on Household Asset Allocation: Evidence from CHFS Data

Low household risk market participation has been a problem for a long time in China, this study explores the issue of Chinese household asset allocation from the perspective of mobile payment. Based on China Household Finance Survey data in 2017, this research studies the impact of mobile payment on Chinese household stock market participation and risk participation by using Probit model. Tobit and OLS model are used to analyze the impact of mobile payment on Chinese household risky asset allocation and the types of risky asset Chinese families hold. To reduce endogeneity caused by omitted variables and measurement errors, this study uses Instrumental Variable to make the estimation. The empirical results indicate that mobile payment can promote household stock market and risk participation by improving social interaction, social trust and financial literacy. Area heterogeneity analysis shows that mobile payment has a greater impact on eastern, first, second and third tier, and urban areas. Additionally, heterogeneity of family characteristics shows that mobile payment is more effective for highly educated households. This study provides a new perspective to conduct research on investment problems in China, and has extremely strong practical significance.

Household Stock Market Participation: Learning from Pension Fund Asset Allocation

Household Stock Market Participation: Learning from Pension Fund Asset Allocation

Retreating from Risks: Household Stock Market Participation in a Protectionist Era

Retreating from Risks: Household Stock Market Participation in a Protectionist Era

Local IPOs and Household Stock Market Participation

Abstract The decrease in companies going public has received widespread attention, and the associated costs are widely debated. We document high local IPO activity leads to increases in stock market participation of 5–6%. This is striking given that such participation represents a key factor toward building wealth. Local IPOs increase both households’ propensity to own stock and their percent equity holdings. The attention channel drives effects: local IPOs attract attention to the market, through increased information production and publicity. The wealth channel has little influence, consistent with local IPOs not generating wealth shocks for most households.

Individualism and stock market participation

ABSTRACT This paper investigates the relation between a cultural orientation toward individualism and household stock market participation. We adopt an epidemiological approach to establish causality. Employing large samples of second-generation immigrants in the U.S. and Europe, we focus on how the cultural heritage of individuals from different origins influences their engagement in stock market participation. To verify this relationship, we utilize data from the the Current Population Survey (CPS) and the Survey of Health, Ageing and Retirement in Europe (SHARE). Our findings reveal that immigrants from countries with a stronger individualistic cultural orientation are more likely to participate in the stock market. Furthermore, by leveraging data from the U.S. Census and American Community Survey (ACS), we demonstrate that the positive effect of individualistic cultural heritage is amplified for immigrants whose parents have made significant cultural investments. Additionally, utilizing data from the General Social Survey (GSS) to identify cultural mechanisms, we uncover that individualism culture shapes immigrants’ beliefs by fostering trust and optimism. Overall, our empirical evidence underscores the profound and persistent of culture on household stock market participation.

Effects of adult children's marriage on household stock market participation: An event‐study difference‐in‐differences approach using Chinese micro data

AbstractThis paper examines households' stock market participation responses to a critical life‐cycle event, adult children's marriage. An event‐study difference‐in‐differences approach is employed to facilitate identification, which compares changes in the stock market participation behaviors of households that experience children's marriage with households that experience it later as well as households that never experience it. Exploiting household‐wide variations in exposure to children's marriage using the China Family Panel Studies data over the 2010–2020 period, this paper finds that 2 years after children's marriage, households significantly enhance their likelihood of participating in the stock market. Households' willingness to participate increases by 1.1 to 1.6 percentage points depending on specifications. This paper's finding supports time‐varying risk aversion at the household level. Mechanism analysis indicates that children's marriage raises household risk preferences because it mitigates parental old‐age support concerns and alleviates households' consumption commitment to housing and children.

Does community resilience affect household asset portfolio choices?

AbstractThis paper identifies a positive (negative) relationship between community resilience and household stock market participation (deposit flows). These relationships are less pronounced for higher‐income and married households, indicating an income channel and a marriage channel, respectively. Furthermore, compared to white and Asian households, black households are more sensitive to the effects of community resilience on household investments and deposit flows. Overall, our findings suggest that improvements in people's preparedness for, resilience against, and recovery from potential hazardous events and natural disasters shift households' asset portfolio choices from safe savings to risky stock investments.

On household food stock and waste under risk

ABSTRACTThis paper investigates household behavioral response to disruptions in the food supply chain, with a focus on the role for risk and its effects on household food stocks and food waste. We present an empirical analysis based on data from Chinese consumers over multiple periods in 2019 and during the COVID‐19 crisis of 2020. We investigate how household behavior changed during the COVID‐19 crisis, documenting both food stockpiling and increased food waste. The econometric analysis relies on a control function approach to handle endogeneity. We decompose the effects of increased risk on waste during the crisis into two components: the direct effect reflecting household decisions conditional on food stock; and the indirect effect associated with induced adjustments in food stock. Both effects on food waste are found to be positive, reflecting difficulties households have in managing large food stocks. We present evidence that one percentage point increase in household stocks during a period of supply disruption contributed to a 0.055–0.297 percentage point increase in food waste across food categories. We also present evidence that these effects may persist over time.

Extrapolators and Contrarians: Forecast Bias and Household Stock Trading

Extrapolators and Contrarians: Forecast Bias and Household Stock Trading

Household Stock Market Participation, Local Banks, and Local Economic Development

Household Stock Market Participation, Local Banks, and Local Economic Development

Impact of financial literacy on household stock profit level in China.

The popularization of financial literacy has become a global trend, with governments across the world expressing commitment to continuously enhancing the financial literacy of their citizens to improve the country's overall financial well-being. However, there is a lack of research evaluating the actual effects of financial literacy on Chinese households. This study first investigated the micro impact of financial literacy on the household stock profit level using data from the 2019 China Household Finance Survey. As most existing studies use factor analysis to measure financial literacy from a single dimension of financial knowledge, our study additionally used the entropy method to construct a composite evaluation system of financial literacy from four dimensions: financial skills, knowledge, attitudes, and behaviors. The ordinary least squares model was utilized as the primary regression model to estimate the correlation, and the average financial literacy of other households in the same community was selected as an instrumental variable. Further instrumental variable regression analysis was conducted using the two-stage least squares method. Three robustness tests were performed to ensure the reliability of the research findings. The results demonstrate that financial literacy significantly enhances household stock profit levels. The mediation effect analysis indicates that financial literacy affects stock profit levels through financial information attention. Moreover, financial literacy has a more substantial promoting effect on stock profit levels for households with members working for state-owned enterprises and those living in first-tier cities. This study confirms the value of financial literacy; identifies important channels for residents to increase their property income; and provides important guidance for the government, educational organizations, and financial institutions. This also injects more vigor into market participation to improve the persistently sluggish Chinese stock market.

Social support and household stock market participation

Social support and household stock market participation

Accounting Quality and Household Stock Market Participation

SYNOPSISRecent research documents that there is significant variation in stock market participation by state and suggests that there may be state-specific factors that determine stock market participation of U.S. households. Using household survey data, we examine how state-level, public-company accounting quality affects households’ stock market participation decisions. We find that households residing in states where local public companies have better accounting quality are more likely to invest in stocks. Also, those households invest greater amounts of their wealth in the stock market. Furthermore, we present some evidence that accounting quality affects stock market participation through local press coverage. Additional cross-sectional tests show that the effect of accounting quality on stock market participation is more pronounced among less affluent and less educated households, consistent with prior findings that familiarity with and trust in the stock market are more important for those types of households to make stock investments.JEL Classifications: D14; G11; M41.

THE TRANSFORMATION OF RETAIL CREDIT FINANCING IN THE WAKE OF THE CRISES IN HUNGARY

The money abundance that preceded the 2008 crisis brought about a number of distortions in the value judgements of economic actors and their attitudes towards money. Unlimited liquidity generated a huge supply of credit, which all economic players exploited beyond their means. The crisis-induced downturn caused huge problems in the repayment of loans. Tens of thousands of families and businesses have faced problems in surviving, caused by increased credit burdens. As a consequence, attitudes towards credit changed significantly after the crisis. For the Hungarian households too, excessive borrowing before the crisis caused huge problems. In Hungary, the problem was not only with the volume of credit, but also with its denomination. The proliferation of foreign currency lending and the exchange rate risk that it entailed was a huge challenge for tens of thousands of families, which they could only overcome with state support. The aim of this study is to examine the borrowing of households in Hungary over a number of years, looking in particular at its composition and the types of credit. In this study, the analysis was based on the household stock data of the Hungarian National Bank. The aim of the work is to show the trends and changes in Hungarian household borrowing in the wake of the crises. The analysis reveals the effects of the crises, which can be reduced by increasing financial awareness. The study provides a good basis for strengthening the financial culture of Hungarian households, which areas limit future irresponsible borrowing and provide a good shield against crises in the financial field.

Military experience and household stock market participation: Evidence from China

Military experience and household stock market participation: Evidence from China

Broadband internet and stock market participation

This paper examines the effect of broadband Internet on household stock market participation. By exploiting the expansion of broadband in the U.S. from 1999 to 2008, we find that the availability of broadband in a household’s zip code significantly increases the likelihood of stockholding and the share of wealth invested in stocks. Moreover, this effect operates through a higher tendency to follow the stock market, indicating that broadband access reduces the information cost associated with stockholding. The effect of broadband access concentrates among people with high socioeconomic status. Our study speaks to the role of technology development in household finance.

Does regional gender inequality affect stock market participation? Evidence from China

In this article, we examine whether regional gender inequality affects a household’s decision to participate in stock market in China. Based on a nationwide micro data, our empirical results show that households in counties with greater gender inequality are less likely to hold risky assets. The results are robust to a number of variations in our empirical models. The negative effect of gender inequality on household stock market participation is stronger for households located in northern China. Moreover, we provide evidence suggestive of the role of the declined social interaction operating through gender inequality.

Religious beliefs and stock market participation: Evidence from urban households in China

This paper investigates how religious beliefs affect urban household stock market participation in China. We use the China Household Finance Survey in 2013 to show that religious beliefs inhibit total stock market participation and its increment. Such a negative effect is significant only for Buddhists and Protestants in China. We provide a new explanation from the perspective of expected utility maximization. Specifically, religious activities crowd out the time spent on improving financial literacy and lower the commercial insurance expenses that reduce risks in an individual’s current life. Our results hold after considering the potential endogeneity problem and various robustness tests. • Religious beliefs inhibit urban household stock market participation in China. • Both the extensity and intensity of stock market participation are examined. • Such a negative effect is only significant among Buddhists and Protestants. • Religious activities crowd out the time spent improving financial literacy. • They also lower commercial insurance expenses that reduce current life’s risks.

Geopolitical risk and household stock market participation

I find that the index of geopolitical risk (GPR) is significantly associated with both the extensive and intensive margins of stock market participation decisions. The GPR index subsumes the significance of economic policy uncertainty for stock market participation decisions and has long-lasting effects for up to 12 months. I further investigate the economic channel through which the GPR index is associated with stock market participation. Empirical evidence suggests that it is a link between the GPR index and financial uncertainty that drives the results. However, I do not find evidence supporting the income uncertainty channel.

Household stock market participation in South Africa: the role of financial literacy and social interactions

PurposeOne of the most important phenomena that have been confronted in the field of household finance is the stock market participation puzzle. The puzzle describes the anomaly that the majority of households do not have ownership of stock market products, though empirically stocks give higher expected returns than risk-free assets. The stock market participation rate plays an important role as it has a direct bearing on the equity premium. In this study, the authors aim to investigate how financial literacy and various proxies of social interaction are associated with stock market participation in South Africa.Design/methodology/approachThe study uses probit regression and ordinary least squares using the South African National Income Dynamics survey Wave 5 of 2017 to investigate whether financial literacy and social interaction are significantly associated with stock market participation. The financial literacy index is computed using factor analysis on the responses to the financial literacy questions used in the survey. The authors use three proxies for social interaction, namely membership in a Stokvel, membership in a men's association and membership in a women's association.FindingsThe results reveal that an increase in financial literacy increases the odds of respondents participating in the stock market. Among the control variables, age, race and level of education are significantly associated with stock market participation. When it comes to social interaction, it is belonging to a men's association that is significantly associated with stock market participation. The other proxies for social interaction are insignificantly associated with stock market participation.Originality/valueThe study contributes to the extant literature by using a set of proxies for social interaction that have the potential to influence stock market participation which have not been used in a South African context.