House Price Changes And Household Financial Behavior

Real estate industry has developed rapidly in recent years and urban housing price shows a rising trend.The development of the real estate market is related to sectors of national economy and has been widely concerned by the industry and academia.Researches show that the rise in housing price has significant influences on macroeconomic development,corporate and household behavior.And researches on household behavior mainly focus on consumption,saving and entrepreneuship.However,few literatures has integrate the changes of housing price and various financial behaviors of households into a unified analytical framework.Using data from the China Household Finance Survey(CHFS)in 2015,2017 and 2019,this paper examines the impacts of housing price changes on households’ financial behaviors from the aspects of borrowing behavior,risky asset allocation,insurance participation,entrepreneurship behavior and consumption behavior.With the background of the rapid development of real estate industry and the rise of housing price,this study intends to carry out a series of empirical analysis on how housing price changes affect various financial behaviors of households based on household survey data,so as to provide a new interpretation perspective for the changes of household financial behaviors while enriching relevant literature on housing price changes.Chapter 2 reviews the literatures of household borrowing behavior,asset allocation,insurance participation,entrepreneurship behavior and consumption behavior.We also integrate the various financial behaviors of households into a unified analytical framework and sors out the mechanism of house price on household borrowing behavior,asset allocation,insurance participation,entrepreneurship behavior and consumption behavior.Chapter 3 explores the effect of rising housing price on household borrowing behavior.We find that,rising housing price has a significantly positive relationship with the participation in formal credit market,while has a significantly negative relationship with the participation in informal credit market.Besides,the rise in housing price significantly promotes the increase in the amount of formal borrowing for households,and has a negative effect on the amount of informal borrowing.Chapter 4 investigates the impact of rising housing price on household risky asset allocation,including the participation and proportion of risky financial market and risky financial asset allocation diversity.The results show that,the rising housing price increases the possibility of participation and proportion in risky financial market as well as the diversity of household risky financial asset allocation.The heterogeneity analysis results show that the positive effect of rising housing prices on household risky financial market participation is more obvious in households with lower asset,lower education and live in rural,middle and western area,while the effect on the diversity of household risky financial asset allocation is more obvious in households with higher wealth.Mechanism analysis shows that the wealth effect generated by house price changes may improve the household’s risk prefer,and thus promote the household’s allocation of risky financial assets.In chapter 5,this paper examines the effect of housing price on household insurance participation.The results show that,housing price has a significantly positive effect on the participation in commercial insurance for households.Housing price also significantly increases the per capita premium expenditure and premium-to-income ratio of household.The heterogeneity results show that the positive effect of rising housing price on household commercial insurance participation is more obvious in households with lower income,lower asset and households with no social insurance.Chapter 6 investigates the impact of housing price on households entrepreneurshiop.Results show that,rising housing price have significant negative impacts on household entrepreneurial decision-making and new entrepreneurship.Furthermore,housing price has a significant negative impact on households’ opportunistic entrepreneurship,and it also significantly reduces the willingness of households to create a new business.Besides,housing price has a significant negative impact on households entrepreneurial performance,which is manifested in reducing the households’ entrepreneurial profitability.Chapter 7 explores the effect of rising housing price on household consumption.We find that housing price has a significantly positive effect on household consumption,especially for non-durable consumption.The heterogeneity results show that the positive effect of rising housing price on household consumption is more obvious in younger households and households with house and higher liquidity.Mechanism analysis shows that the positive effects of rising house prices on households have produced a relatively obvious income-increasing effect,thereby promoting the increase in household consumption and producing a certain welfare effect.It also reduce the overall borrowing constraints faced by households.The possible innovations of this dissertation are shown as followings:First,this paper systematically examines the impact of housing price changes on household financial behavior from the perspective of housing price changes.With the development of the real estate market,the rapidly growing housing price may have an important impacts on household financial behavior.This paper discusses the household financial behavior from the perspective of housing price,which not only reflects the economic effect of housing price from the micro perspective of households,but also provides a new perspective to explain the changes of household financial behavior in recent years.Second,we take the household financial behavior into a unified analysis framework from the aspects of household debt,assets and welfare,and analyzes the uniform influence of housing price change on household financial behavior.There have been researches on the impact of housing price on household consumption,savings rate and entrepreneurship,however,there are few documents that incorporate housing price and various financial behaviors of households into a unified analysis framework,and comprehensively analyze the impact of housing prices on household financial behaviors.Therefore,the research in this dissertation is an important supplement to the existing literature.Finally,this paper uses a unified database to systematically examine the household financial behavior.Due to the inconsistency in the use of the database in the existing researches,the studies on the impact of house price changes on the same household’s economic and financial behavior often come to inconsistent research conclusions.Therefore,this paper uses micro multiple-period survey data to analyse the overall effects of house price on household financial behavior,which largely reduces the deviation of research conclusions due to database inconsistencies.Based on household micro survey data,this paper can better reflect the specific impact of housing prices on micro household financial behavior.