The Impact Of Background Risk On Household Risk Financial Asset Allocation

The traditional household asset allocation theory assumes that people are Rational and the market is completely efficient.Based on this assumption,it is believed that to some extent,households will hold risky financial assets.But the reality is that the number of households participating in risky financial markets is very limited.The reason is that the allocation of risky financial assets by households is not only related to the risk of the assets themselves,but also related to their own family characteristics,namely,background risk.Based on this,this article takes family background risk as a unique perspective,analyzes the behavior of family investors from three perspectives:human capital,social relations,and house wealth,and studies financial asset allocation decisions with family units as the main body,with a view to more accurately understanding how family background risk affects family decision-making behavior,thereby maximizing the benefits of family assets.The data used in this article is from a nationwide sampling survey conducted by the China Family Finance Survey and Research Center of Southwest University of Finance and Economics in 2019.Probit model and Tobit model are constructed for empirical analysis,with the allocation of family risk financial assets and the proportion of risk financial assets as the explanatory variables,and human capital,social relations,and house wealth as the proxy explanatory variables.Using age,the square of age,gender,marital status,household registRation type,risk attitude,and region as control variables,this paper empirically studies the impact of human capital,social relations,and house wealth on the allocation of risky financial assets in households,and analyzes its impact mechanism.The main conclusions reached in this article are as follows:Human capital can significantly affect the probability and proportion of households’ allocation of risky financial assets.The impact mechanism is mainly that human capital affects the allocation of household risky financial assets through two intermediary variables,namely,income and financial information attention.Social relations also has a significant positive impact on household financial asset allocation,but the impact is weaker compared to human capital and house wealth.The reason may be influenced by the social network of strong relationships among big clans in China.The impact mechanism of social relations on the allocation of household risky financial assets is accomplished through the intermediary variables that affect risk preference.House wealth has the most significant impact on household financial asset allocation among the three factors.Household wealth affects household risk financial asset allocation by affecting financial skills,but this mesomeric effect is weak...