Research On Social Network And Household Financial Portfolio Choice In China

A current and actively debated topic is research on social network and household financial portfolio choice in China.Chinese households show the heterogeneity characteristic which allocate more savings as financial assets and lower risky financial assets.This leads to consumption stagnation as well as imbalance between deposit and credit,which baffle the economic development of China.This study analyzes data from the 2013 China Household Finance Survey,building social network index,to investigate the linear as well as non-linear relation between social networks and household financial portfolio choice in China,including relationship between social network and household financial market participation,relationship between social network and depth of household financial market participation,relationship between social network and structure of household financial portfolio,relationship between social network and efficiency of household financial portfolio.Specially,social network is divided into three dimensions,namely social status,social relation and clan organization,for purpose of analyzing their specific role and fine distinction.In addition,this study makes further exploration of the influencing mechanism through which social network impacts household financial market participation,depth of household financial market participation,structure of household financial portfolio and efficiency of household financial portfolio.Firstly,social network acts on liquidity constraint and uncertainty about future to influence risk preference.Secondly,social network acts on transaction cost and information asymmetry.Thirdly,social.network acts on learning cost,learning willingness,investor sentiment and degree of information transfer,thereby influencing household financial portfolio choice.Hence,this study further analyzes data from the 2013 China Household Finance Survey,continue using social network index,social status,social relation and clan organization,to investigate whether social effects household financial portfolio choice through influencing mechanism of risk preference,whether social network impacts household financial portfolio choice through Influencing mechanism of information acquisition,whether social network impacts household financial portfolio choice through Influencing mechanism of learning ability.The finding suggests the relationship between social network and household financial portfolio choice is positive,showing that increasing the social network adds the probability of owning risky financial assets,the allocation of portfolio shares,the degree of structure decentralization household financial portfolio,the efficiency of household financial portfolio.Further,social network impacts household financial portfolio choice through influencing mechanism of risk preference,information acquisition and learning ability.Specially,social status and social relation positively influence the probability of owning risky financial assets,the allocation of portfolio shares,the degree of structure decentralization household financial portfolio,the efficiency of household financial portfolio,and these two dimensions impact household financial portfolio choice through influencing mechanism of risk preference,information acquisition and learning ability.While there is no significant impact between clan organization and the degree of structure decentralization household financial portfolio,and this dimension impacts household financial portfolio choice only through influencing mechanism of information acquisition.Moreover,personality structure,family characteristics and regional characteristics are also the influence factors of household financial portfolio choice.Based on the empirical result of a positive link between social network and household financial portfolio choice,combining current situation of Chinese household financial portfolio,the suggestions of building appropriate and high-quality social network,.improvement in the social security system,establishing a long-term mechanism for information sharing,improving learning ability,strengthening financial awareness,making green development stategy,increasing income,improving rural financial environment are given.