Empirical Examination Asset Allocation And Wealth Effect Of Rural Household

In the past 3 decades,China has experienced rapid economic growth and promoted the continuous improvement of income levels and the accumulation of family wealth.The most important change is the diversification of household portfolio,especially for the rural family.Rural households have mainly composed by saving account for the past 20 years,but they started to invest in stock,mutual fund,commercial insurance,government bond,corporate bond,gold,foreign exchange and other asset portfolio model changes,and even choose futures,Options,warrants and other financial derivatives.Although the saving account still dominated the household assets,the proportion of low-risk assets such as cash and savings is declining,while the proportion of financial assets with higher ri0 sk increases with the increase of total household assets.Therefore,it is of great practical significance to study the allocation of financial asset and consumption behavior of rural household.Based on theory of consumer finance,this paper analyzed the heterogenous asset allocation and the consumption behavior of rural household with a microdata of 13,634 households.Empitical results provided suggestions for government departments to optimize the allocation of household assets in rural households,promote the formulation of policies for rural residents’ consumption,and development China’s rural finance market,and provided policy suggestion for the innovation and development of financial practices.(1)Mian Contents:(i)Analysis of Rural Household’s asset allocation.The growth China’s economy is helpful to develop domestic household finance market.Based the the CHFS2013,this paper found that significant heterogeneity was shown in the choice of household household assets.The probability of rural household participating in financial markets was getting higher,but in general the proportion of risky assets in household assets was still very low.The results also show that demographic characteristics,i.e.age,sex and education and other factors might might explain the heterogeneitly of asset allocation of rural household.(ii)This paper divided the family structure of rural household into two dimensions: family structure and marital status.The empirical results by Probit and Tobit models indicated that old dependency,child dependency,family size,and generation play a important role in participation probility and holding weight of household asset.In addition,the results also indicate that marital status,including marital status,marriage age,marriage and family attitudes and marital structure matching heterogeneity,could explain the heterogenerity of household asset allocation.(iii)In addition,empirical analysis was taken to test the wealth effect of rural household in term of saving,stock,housing,as well as commercial insurance.The results indicated that allocation of saving,stock,housing,commercial insurance are positively related to the consumption.The results also indicated the wealth effect of household assets displayed the regional difference.Therefore,the wealth effect is important for the expansion of Chinese economic growth.(2)Main Conclusions:(i)With the further structural reform of China’s economy,rural finance has been rapidly developed.The financial assets of rural households are continuously enriched,and the development trend of diversification of household assets is remarkable.However,saving is still the main choice of household assets.The probability of household participation in stock investment is lower,and the proportion of holding stocks is lower as well.In short,the proportion of family risky assets of rural household is relatively low.(ii)From the descriptive statistical results,rural household with different demographic characteristics such as sex,education level,place of residence,health status,risk attitude,possession of self-employed industries and commerce participated in four different assets such as commercial housing,saving,stock and commercial insurance.Due to the households with heterogeneous characteristics in term of family structure and marital statuss also show significant role in asset allocation.(iii)As far as the relationship between family demographics and rural household’s asset allocation is concerned,the empirical results show that the greater the old dependency.In addition the the family size and the family intergenerational is negatively realated to the participation of safe asset selection.The child dependency has a significant role in promoting the participation of stock,commercial real estate and commercial insurance.Generally speaking,family stucture factors have an important influence on the choice of household asset allocation,but there are some differences in the demographic factors of different families.(iv)As far as the relationship between marital status and household finance is concerned,the empirical results show that the probability and proportion of married households participating in the choice of assets such as savings and commercial housing are higher than those of single-family household,and their relationship with stock and commercial insurance participation probability was significantly negatively correlated.However,the proportion of married family’s holding stock was significantly lower than that of unmarried families.Married households with stronger marital attitudes have a higher proportion of participating households than unmarried families,with a lower share of participating stock allcation.Rural families with longer marriage age have a lower probability of participating in the stock and holding more shares than those with shorter marriage age.Households with heterogeneous households have a significantly higher probability of participating in saving and stock than their homogeneous counterparts.In short,the marital factors have an important influence on the choice of household assets,but there are some differences in the influence of different demographic variables.(v)Rural household asset shows a significant wealth effect on household consumption behavior.Empirical results show that household asset,such as household allocation of saving,stock,commercial housing and commercial insurance have a significant role in promoting the increase of household consumption expenditure,which is so called wealth effect.Although commercial insurance accounted for the smallest share of the other three household assets,empicial analysis reveals that commercial insurance has the greatest impact on consumption.At the same time,the promotion effect is more significant in the central and western region relative to the eastern region.Furthermore,the educational level of family head is positively related to the promotion effect of eastern rural household than that of rural household in the central and western region.The promotion of consumer spending on rural households in central and western China is even stronger than that of rural households in the eastern region.Further analysis found that the interaction of family structure and holding asset plays an important role in mechanism of consumption promotion.(3)Main Innovations:From the perspective of household finance,this paper screened and constructed the micro-data of rural households in China and conducted a detailed and in-depth study on the selection and consumption of farmer household assets during the period of China’s economic transition.This study may have some innovations in three aspects: research perspective,analysis method and data usage.(i)From the perspective of research,most existing literatures take urban families as the research object,but ignoring the micro-discussion of rural families.In fact,western classical finance theory could not fully explain the household consumption and asset allocation behaviors of rural household in the context of China’s "urban-rural dual structure".If simply based on the existing empirical findings,it may lead to inaccurate policy advice.In this study,household asset allocation for farmers as the object of study,on the one hand,the results of wealth effect of household asset provide empirical evidence,the existing literature do make a useful supplement;on the other hand not only the family structure into the household asset allocation research framework,moreover,the family structure is firstly divided into two dimensions: family demographics and marital relations.The family property choices are systematically studied,providing micro-empirical evidence for relevant theories and enriching the existing family financial literature.(ii)On the basis of theoretical analysis and research hypothesis,this study focuses on the in-depth analysis of various research issues,using comparative analysis,combination of quantitative and qualitative studies,and literature analysis from multiple academic angles.According to the actual needs,we use the different measurement methods,including OLS least squares,Probit generalized linear model,Tobit sample selection model,etc.to conduct in-depth study,and carried out robustness analysis,in order to obtain more reliable and convincing conclusions.(iii)From the perspective of data usage,this study effectively screened data from CHFS and obtained micro-data on rural household with large sample size and high data quality.Different the previous analysis based on provincial panel data,this paper uses the micro data,and the micro-data samples are divided according to the area where the farmer household belongs,the wealth effect of the household asset and the heterogeneity of the household asset allocation are studied,and the experience of using the micro-data is obtained,and some conclusions are obtained.