Socioeconomic Status And Stock Market Participation

To deepen financial reform and promote the development of direct financing market,China needs families to participate in the stock market to promote market vitality,improve its liquidity and resource allocation efficiency,make funds flow to more efficient enterprises,and enhance the ability of financial services to the real economy.At the same time,under the new normal of China's economy,it is necessary to rely on consumption to stimulate economic growth.Therefore,broadening household income channels,increasing the family's asset income,and improving residents' consumption power are important ways to promote China's economic development.Therefore,studying the participation of the stock market has important practical significance.Classical theory holds that every rational economic person will invest a part of the assets in the stock market to optimize the allocation of household assets.However,unlike theoretical research,individuals in the real situation have shown insufficient participation in the stock market.Despite the high equity premium,many households do not invest in stocks.Even investors who participate in the stock market are far less likely to hold shares than the theoretically optimal risk assets.It is known as the “mystery of limited participation” in the stock market.At the 2006 American Finance Annual Conference,Campbell proposed that family finance is a new independent research direction with traditional financial research such as corporate finance and asset pricing,and pointed out that insufficient participation in the stock market is one of the important research topics in the family finance field.At the same time,it is pointed out that the problem of insufficient participation in the stock market is one of the possible reasons for explaining the mystery of the equity premium in the field of finance.Based on the new perspective of stock return cognition bias,this paper studies the problem of family socioeconomic status affecting the participation tendency of Chinese family stock market by affecting the cognitive bias of stock return.In order to better understand the influence of family socioeconomic status on the cognitive bias of stock return,this paper has carried out further research to explore which factors may be related to this impact.In this part,I propose and complete the verification: the impact of family socioeconomic adversity on underestimating stock return is related to individual sentiment.The main contributions of this article are the following two points:First,the contribution of the research perspective.For the first time,this paper explores the problem of insufficient participation of Chinese family stock market from a new perspective,that is,the underestimation bias of family cognitive stock return,and broadens the breadth of research on this issue.Second,the contribution of the data.This article uses the data from the China Household Finance Survey(CHFS)of Southwestern University of Finance and Economics.Compared with the macro official statistics such as the National Bureau of Statistics,the CHFS data can more accurately reflect the true situation of the individual family and is more representative.