Disaster Shocks,Social Networks,and Household Financial Vulnerability

The report of the Party’s 20th National Congress pointed out that the bottom line of avoiding systemic financial risks should be firmly maintained,and one possible source of systemic risk is the household sector.Household financial vulnerability is the manifestation of social financial risk at the micro level,and it is also a microcosm of the family’s economic status.It mainly refers to the possibility of households experiencing financial distress in the face of adverse economic shocks,reflecting the impact of these shocks on household wealth and consumption and the ability of households to cope with these shocks.On the one hand,the higher the household financial vulnerability,the lower the household risk tolerance,which is not conducive to people’s livelihood.On the other hand,the financial vulnerability of households may adversely affect the operation of financial institutions and trigger financial crises.Because the decline in household repayment ability may lead to losses in banks and other financial institutions.Disaster impact,as a common risk factor,has an important influence on family consumption and welfare in our country.In the face of disaster impact,social networks,as an informal risk coping resource,provide credit or guarantee,provide differentiated information and other functions to help reduce the possibility of households entering a vulnerable state after disaster.At present,there are few studies that directly link social network with family financial vulnerability.This paper holds that our society is a typical "relational" society that depends on interpersonal relationship and human exchange,and the relationship has strong and weak points.In such a social context,families often exchange information through the social network layer,which further affects the economic behavior of families.Therefore,it is of great practical and theoretical significance to explore the influencing factors of household financial vulnerability from the perspective of disaster impact and social network.In view of this,this paper empirically tests the impact of disaster shock on household financial vulnerability,and further explores the mitigating role of social network.First,on the basis of reviewing the literature,we construct the index of household financial vulnerability,which includes household financial margin and solvency.Secondly,using the balance panel data of CHFS questionnaire in 2015,2017 and 2019,The panel logit model was constructed to investigate the impact of disaster shock on household financial vulnerability,and the interaction terms between strong social network and weak social network and disaster shock were constructed respectively to test the mitigation effects of different strong and weak social networks on the impact of disaster shock on household financial vulnerability.Finally,after a series of robustness tests,heterogeneity analysis was carried out according to disaster category,urban and rural category,head of household age category and household income level.This paper draws the following three conclusions:First,disaster shock can significantly exacerbate household financial vulnerability,and social network can alleviate the impact of disaster shock on household financial vulnerability as an informal way of risk taking.Second,weak social network can significantly reduce the impact of disaster shock on household financial vulnerability,while strong social network has no significant effect.Third,in terms of heterogeneity,first of all,compared with the impact of man-made disasters,social networks can better reduce the impact of natural disasters on household financial vulnerability.Second,compared with older heads of households of non-working age,young heads of households are better able to use social capital to alleviate economic vulnerability.Third,compared with urban areas,social networks in rural areas can significantly reduce the impact of disaster shocks on household financial vulnerability.Finally,compared with non-low-income households,social networks can better reduce the household financial vulnerability of low-income households.The conclusion of this paper provides a new perspective and empirical evidence for understanding the relationship between disaster impact and household financial vulnerability as well as the economic role of social network,and provides a reference for preventing household financial risks and improving post-disaster reconstruction in disaster areas.