Analysis On The Impact Of Interest Rate Marketization On Household Financial Asset Allocation In China

In recent years,with the steady development of China’s economy and the continuous improvement of residents’ income,the financial assets held by families have also accumulated rapidly.From 2011 to 2021,the total amount of savings deposits,financial management,stocks,funds and other financial assets held by Chinese families increased from less than 50 trillion yuan to about 200 trillion yuan.The increasing scale of family financial assets let household finance attract the attention of domestic scholars and researchers.The allocation of these assets also has an important impact on the development and stability of the whole financial market.The allocation structure of these assets has also become the focus of household financial research.As an independent research concept,household finance first appeared at the annual meeting of the American Financial Association(AFA)in 2006.Professor Campbell first proposed to take household finance as an independent field for specialized research.After several years of development,the relevant theories of foreign household finance have been gradually completed,and the statistics and Research on the scale of household financial assets,the allocation structure of household financial assets and the choice behavior of household financial assets have been very rich.Domestic household finance and related research started relatively late.At present,the main research still focuses on the structure of household financial asset allocation and the influencing factors of structural changes.The common influencing factors include economic development,family income,consumer expenditure,age or risk,etc.However,China is in the final stage of interest rate marketization reform.The interest rate pricing control measures and financial business entry restrictions that have been strictly followed were cancelled one after another.The change of financial market environment will have an impact on financial institutions,enterprises,families and other departments.However,at present,there is little research on interest rate marketization as an influencing factor of household financial asset allocation in China.This paper makes statistics on the overall allocation of household financial assets at the completion stage of interest rate marketization reform.At the same time,this paper comprehensively investigates the allocation of household financial assets in China from the macro and micro perspectives with China Household Finance Survey(CHFS2017),and finds that the proportion of relatively risk-free assets such as savings deposits has decreased,and the allocation of financial assets has become more and more decentralized Diversification.Under the background of interest rate marketization reform,this paper comprehensively analyzes how the allocation of household financial assets is affected by the reform,which is of practical significance.The market-oriented reform of interest rate enables financial institutions represented by commercial banks to freely determine the interest rate level of their business,which leads to the competition of deposit and loan interest rates,squeezes the profit space brought by the deposit and loan spread business of commercial banks,and increases the operational risk.Commercial banks seek business transformation and provide families with non interest products with higher expected rate of return,and guide families to change from savings customers to asset management customers,resulting in a decline in the proportion of relatively risk-free financial assets of savings deposits in family financial assets.In the face of the increasing risks of commercial banks due to interest rate pricing competition,families will also deliberately disperse the allocation of financial assets to make the types of financial assets more abundant and the structure more reasonable.Therefore,this paper makes a research hypothesis that the interest rate marketization will reduce the proportion of savings and deposit assets in household financial assets and increase the types of allocated financial assets,and uses the household financial data sampled by CHFS(2017)and the self constructed interest rate marketization variables,Establish multiple linear regression model and multiple logit model for empirical research,and analyze the impact of interest rate marketization on the proportion of household savings deposits in financial assets and the number of financial assets held by households.Then the heterogeneity of influence was tested by sub sample regression.The results show that the reform of interest rate marketization has indeed had an impact on the allocation of household financial assets.The more intense the free pricing competition of deposit and loan interest rates caused by interest rate marketization,the lower the proportion of savings and deposit assets in the financial assets allocated by households,and the more abundant and diversified the types of financial assets allocated.Finally,based on the empirical results,this paper draws the research conclusions and puts forward some suggestions on how to deal with the changes of household financial asset allocation in the future.