A Study On The Chinese Households Financial Market Participation From The Perspective Of Occupations And Human Capital

As classic portfolio theory predicts,all investors should participate in the risk financial market by investing in the market portfolios,regardless of their wealth and risk preference.In fact,many households do not participate in risk financial markets,nor do they hold market portfolios even if they are in the risk market.There is a huge difference between the theory and the actual behavior.The practice of household asset allocation cannot be explained by the classic theory.Many scholars concern that who is not involved in the risk financial market and why they don’t participate.This paper attempts to study on this issue from the perspective of occupation and human capital.This paper mainly comes to the following conclusions: Ⅰ.This paper brings human capital factors of the industry into the framework of portfolio theory.By solving the optimal weight vector,it is found that the optimized results calculated by the portfolio theory are not consistent with the households’ asset allocation in real life.It is obvious that “limited participation” puzzle of financial market exists in Chinese households.Ⅱ.By using the data of China Family Panel Studies(CFPS)conducted by Institute of Social Science Survey of Peking University in the year of 2010,2012,2014 and 2016,it is found that households with large human capital are more inclined to participate in the financial market Ⅲ.There is an "inverted U-shape" relationship between professional reputation and financial market participation.The group with high professional reputation are less likely to participate in the risky financial markets than the groups with middle-high and low professional reputation.Since the group with high professional reputation faces looser borrowing constrains,they are more willing to pay more attentions to commercial housing market instead of financial market.Ⅳ.Considering the influence of information costs,the more households work,the less likely they are to participate in the risky financial markets.Investors with more working hours hold less actively managed risky assets.While working hours have no significant influence on passively managed risk assets.Further study shows that working time has the most significant impact on the participation in stock market for middle-income households compared with low-income and high-income households.The increase of working hours has a greater influence on the stock market participation of households with less wealth.Ⅴ.Higher job satisfaction may reduce stock market participation,which can be explained as the substitution effect between hard work and stock market participation.Specifically,job income satisfaction and job promotion opportunity satisfaction were the most important factors affecting the participation of households in the stock market.The increase of job satisfaction significantly reduces the direct shareholding behavior of households,but it has no significant impact on the indirect shareholding behavior.