Research On The Impact Of Housing Provident Fund On The Allocation Of Household Risky Financial Assets In China

According to the Outline of the 14 th Five-Year Plan(2021-2025)for National Economic and Social Development and Vision 2035 of the People’s Republic of China,we should expand the channels for increasing people’s income and increase their property income through multiple channels.However,the problem of limited participation in the risky financial market is particularly prominent in China.Previous studies have shown that investment in housing has a crowding out effect on household risky asset investment.With the rapid growth of China’s housing price,residents’ enthusiasm for real estate investment does not decrease.The original intention of the establishment of housing provident fund is to raise funds for house-building,speed up housing construction,form a good situation of housing mutual aid,in order to improve the housing conditions of workers.But residents who do not draw on the provident fund can only receive lower interest rates.In the context of COVID-19 prevention and control,a debate on whether to reform or even abolish the provident fund system has attracted unprecedented attention from all sectors of society,and the goals and direction of the reform of the provident fund system have also become a hot topic.However,The number of people participating in housing provident fund has exceeded100 million,and its fund scale is as high as one trillion yuan.Housing provident fund has a wide range of concerns and complex interests.Therefore,the reform of housing provident fund needs to be highly cautious.The housing provident fund system is a mutual housing financial saving plan.Any substantial reform must be based on the profound reflection and analysis of its system attributes and functional positioning.This paper,through theoretical and empirical analysis,using Survey and Research Center for China Household Finance(CHFS)2019 years of data,from a micro perspective,studies the impact of housing provident fund on household risky financial market participation and diversification of household risky asset allocation.And selects the most representative stock asset for research.It also analyzes the mediating effect of household income and household head’s risk preference.First of all,the research topic is proposed in the current context,relevant concepts are defined,and existing literature is sorted out.Based on relevant theories,this paper analyzes the mechanism of housing provident fund’s influence on household risky financial asset allocation,and also analyzes the mediating effect of household total income and household risk preference.Then,it reviews the development of China’s housing provident fund and analyzes the current situation of China’s household risky financial assets allocation.In the empirical part,Probit model and O-Probit model are used for regression respectively to explore the impact of housing provident fund on household risk financial market participation and household risk asset portfolio diversity.The heterogeneity of households with and without houses and the heterogeneity of households with different income levels were also analyzed.The robustness of this paper is verified by changing the regression model and replacing explanatory variables,and the mediating effect of housing provident fund on households’ investment in risky financial assets is also verified.The conclusions of this paper are as follows:Firstly,family members owning housing provident fund can significantly improve their participation in risky financial market.Compared with households without housing provident fund,households with housing provident fund are 2.5%and 2.3% more likely to participate in risky financial market and stock market on average,and both of them are significant at the level of 1%.Owning housing provident fund will also improve the diversity of household risk asset portfolio.Compared with households without housing provident fund,households with housing provident fund will hold more types of financial risky assets,and the empirical results are also significant at the level of 1%.Secondly,heterogeneity analysis shows that housing provident fund has different effects on risky asset allocation of households with and without houses.There are also differences in the impact on households at different income levels.For families with houses,the housing provident fund at the significance level of 1% can improve the possibility of participating in the risky financial market and enhance the diversity of risky financial asset allocation.However,the impact of housing provident fund on households without houses is not significant either in the possibility of participation in the risky financial market or in the diversity of risk asset portfolio.This shows that the housing provident fund can not effectively promote the risk of financial assets investment of households without houses.Housing provident fund has no significant impact on the possibility and diversity of low-income families participating in risk financial market.However,it can significantly promote the risky financial asset allocation of middle-income and high-income families.Thirdly,household income and risk preference play a part of mediating effect in the impact of housing provident fund on household risky financial asset allocation.Housing provident fund can increase the possibility of participating in the risk financial market and diversify the allocation of risky financial assets by increasing household income and increasing the risk preference level of household head.According to the conclusions of this paper,relevant suggestions are put forward from the perspectives of households,financial institutions and relevant government departments.From a new perspective: housing provident fund,this study enriches the research in the field of family finance,and has certain reference significance for further improving China’s housing provident fund system and broadening the channels of residents’ property income.