Social Interaction And Asset Diversification

Portfolio diversification is an important financial decision for families' participating in the capital market.It aims at mitigating risk reasonably and efficiently allocating household assets.The choice of assets decentralization is mainly decided by two factors.On the one hand,considering the society structure characteristics,it is impossible for one family to be separated from the social environment and social relations.Family investment decision-making is influenced by crowd behavior and group psychology,As the social behavior foundation,social interaction is of vital importance in residents' asset allocation process,especially in diversification.On the other hand,from the perspective of human capital,acquired skills are as important as inherent ones and cannot be ignored.Financial cognition refers to the understanding of the financial markets and financial knowledge,it is the combination of objective knowledge and ability derived from long-term financial education.Financial attitude is the psychological response to financial choice,It plays an important role in regulating financial behavior.To sum up,diversification behavior is decided by external social interaction and internal financial cognition and attitude altogether.Using the data from China Centre for Financial Research,under the hypothesis of social interaction directly affect assets diversification,based on the social interaction affecting assets decentralization not only exist direct effect,but also exist a different mechanism of indirect effects,introducing two variables of financial cognition and financial attitude,respectively investigates the financial attitude's moderation effect in the direct effect,and the financial cognitive mediation effect in the indirect effect.Firstly,we study the influence of traditional control variables on diversification behavior using linear regression;Then,we use structural equation model to study the moderation effect of financial attitude and the mediation effect of financial cognition.Finally,we used AMOS overall fitting method,verified the effect of social interaction to family assets decentralization.The study found that,firstly,Social interaction has significantly positive influence on diversification which verified the basic hypothesis;in which direct process financial attitude has negative moderating effect on asset diversification;while financial cognition plays mediating role in the indirect process.Secondly,the comprehensive AMOS fitting results of social interaction,financial cognitive and financial attitude show that,Social interaction affects assets decentralization depend more on the indirect way of financial cognition,at the same time,this direct process will be influence moderated by the financial attitude.Therefore,this paper provides some practical recommendations:strengthen information communication and increase the ability of household to discriminate information;promote financial education popularization,thus promoting family investors' financial cognitive level and updating financial attitude.These will help household effectively manage financial assets in a scientific way,mitigating risk as well as improving financial well-being.