A Study Of The Impact Of Digital Financial Inclusion On The Diversity Of Household Risky Financial Asset Holdings

With the China’s vigorous economic growth momentum and the continuous development of the financial market,more families accumulate their wealth and begin to take part in financial market activities.Household asset allocation,as an important issue for research in the field of household finance,is closely related to increasing residents’ property income and promoting common wealth.Classical portfolio believes that rational investors can obtain higher returns by diversifying family assets in their own risk expectation,while compared with other countries,Chinese households still have the problems of low involvement depth and simplified holding of risky financial products,which are not conducive to avoiding investment risks and achieving family wealth preservation.The development of digital finance inclusion in recent years has broken the limitations of traditional finance,combined with Internet technology to provide low-cost,convenient and diversified digital financial products and services for residents,making them have more channels to access risky financial products.Therefore,this paper examines in depth the impact of the development of digital finance inclusion on the diversity of household risky financial asset holdings from a quantitative perspective.Based on the background,this paper presents the questions and analyzes the current situation of digital finance inclusion and household risky financial asset holdings after reviewing the relevant literature,builds a relevant empirical model to explore the impact of digital finance inclusion on the diversity of household risky financial asset holdings.Firstly,we analyze the current situation of domestic digital finance development and household financial risky investment by using CHFS data of China Household Finance Survey and digital finance inclusion data.The results find that the development of the total digital finance index and its three sub-dimensions is increasing but the speed is decreasing,and there are differences in the development status in different geographic regions,among which the level of digital finance is higher in cities in the eastern than in the central and western.The proportion of household risky finance holdings is increasing,but still not high,and by 2019 there are still more than 60% of households that do not participate in the risky finance market,and most households only hold one or two risky financial products such as stocks and funds,and the proportion of holding for bonds and gold is relatively low.Subsequently,using CHFS2019 and 2018 Digital Financial Inclusion Index,an empirical analysis is conducted on the impact of digital financial development on the types of risky assets held by households in China.Considering too many zero values in the dependent variable,an ordinary counting model and a zero-inflated model are used for comparison,and the optimal model is a Zero-inflated Poisson model obtained by comparing AIC and BIC.The results of the study find that: digital finance has a significant positive effect on household participation in risky financial market and the types of risky financial assets held,and there is also a significant effect on the degree of digitization and depth of use in the sub-dimensions;in terms of heterogeneity,digital finance development can promote the types of risky financial assets allocated to households in second-tier cities and third-tier cities,and the effect is greater for the former,but there is no significant effect on first-tier cities;in terms of impact mechanism,this paper constructs a financial literacy index using factor analysis,which confirms that digital financial development can increase the diversification of household risky financial asset holdings by improving financial literacy,and finally confirms the reliability of the study findings through robustness analysis.Then,in order to improve the rationality of measuring the diversity of household risky financial assets,we combine various types of risky financial products and their asset shares,construct a household risky financial asset diversification index to replace the types of risky financial asset holdings for research,establish a logistic regression model and filter variables through stepwise regression.The results show that the development of digital finance can increase the probability of household diversification,and the model can also predict well using household personal characteristics.Finally,based on the results of the study,this paper puts forward policy recommendations in five areas: optimizing mobile payment and credit investment,innovating financial products to meet the needs of different groups,playing the role of first-tier cities as models to promote balanced regional development,strengthening risk science and education to improve residents’ financial literacy,and establishing algorithmic rules to achieve differentiated financial services.