The Effect Of Financial Development On Household Financial Market Participation And Asset Allocation

In recent years, with the continuous progress of financial deepening,financial innovations accelerate, more and more financial products emerges and international financial markets has also developed quickly,accordingly, huge changes in the amount and structure of household financial assets has taken a great place. The household investment decision-making behavior have attracted more and more scholars’ attentions, all of these leads to the emerging of household finance, in the2006American Finance Association (AFA), Compell firstly view household finance as a emerging research areas following asset pricing, corporate finance. Since then, researches about household Finance sprung.In China, along with the sustained, healthy and rapid development of the national economy, the reform of the income distribution system, residents’ disposable income levels have been further improved. Financial products such as stocks, funds, securities, banking and financial products and financial services perfect a lot, households financial assets also increasingly enrich. Household asset allocation behavior has become an important variable affecting household consumption, intertemporal choice behavior of the household also exert an important impact on the development of the capital market and macroeconomic growth. As an important part of the "property income", household assets not only matter the family welfare improvement, but matter the smooth realization of the transformation of savings into investment and the pace of China’s economic structural adjustment and the model transformation,the meaningfulness of household finance is self-evident.Recently, what is the new changes of the amount and structure of the household financial assets and the status of household finance participation? Which factors affect household financial market participation and financial assets allocation? Research of these topics is of great importance. According to the2011Chinese household finance survey report, our resident financial market participation is at a low level, for example,the stock market participatipn rate is8.84%, the fund market participation rate is4.22%.Truly that there many factors affecting status of China’s household financial market participation, this thesis will, from the new perspective,namely financial development, give a new research of the status of our country resident financial market participation and household assets allocation.This thesis will give a brief review of the literatures about financial development,household financial assets allocation and informal finance. On the basis of these relevant literatures, analysis of the current low level of financial market participation begins, and in-depth analysis of the impact of the financial development on household financial assets will be given, too. Finally, on the basis of our empirical result of our thesis,from the point of view of financial development, we will put forward a number of policy recommendations, and hope to play a positive role to improve the level of our residents financial market participation and control the hazards caused by informal financial effectively.The main content of this paper is as follows:The first chapter is an introduction. It mainly give an introduction of the background and significance of the topic, the structure of the thesis, the research methods applied, the innovations and inadequacies of the thesis.The second chapter is a literature review. A brief review of domestic and foreign researches about financial development, household financial assets allocation, and informal financial research,then suggest our research.The third chapter is a brief review of the theory of household financial assets selection behavior, and describe statue of the households financial assets in the sample data.The fourth chapter is variable descriptions and model setting. In reference to the relevant literatures,our own econometric model will be developed.The fifth chapter is the empirical part. In the basis of the2011Chinese household finance survey data, through the Probit model and Tobit model,we focused analysis of the impact of the financial development on the household financial market participation and assets allocation.The sixth chapter is robustness test. Proving the correctness of the conclusions of the model once again. The seventh chapter is the conclusions and policy recommendations. Financial availability will effectively increase the level of household financial markets participation and inhibit the informal financial development. On this basis, the advice of financial development will be suggested.Through our empirical research, we draw the following conclusions:In this paper, we use the of alternative variable of financial development, the availability of financial services as measured by the number of bank branches per10000populations, and draw the following results:the more the number of banks per10000populations have,.the more the availability of household financial services. the effects of financial development on our resident household financial market participation and asset allocation specific is as follows:First, the increasing household availability of financial services will improve the household financial market participation:on the one hand to improve the probability of risk assets and stock assets holding; On the other hand, will promote household financial asset structure adjustments, improving the proportion of risky financial assets in financial assets and stock assets in the proportion of risky financial assets; Increasing household availability of financial services will reduce household participation in the informal financial market:the family will reduce the financing needs in the informal financial market, but also reduce the supply of participation in informal financial market. In short, the formal financial development will make the household more to involved in the formal financial market and make the asset allocation,accordingly inhibit informal financial markets.According to the latest data of the2011Chinese household finance survey report, from a macro perspective, this thesis give an interpretation of the status of household financial market participations and financial assets allocation. To some extent, it perfects the household financial research in our country and play an complementary role to explain the puzzles faced by the classic investment portfolio theory.A variety of research methods have been applied in this thesis, such as:Firstly, the qualitative and quantitative analysis. In this paper Probit model is used to analyze the impact of financial development on the household financial market participations. Then applying the Tobit model to analyze the household financial assets structure adjustment. Secondly, the combination of micro perspective and macro perspective. The household assets Select econometric model, absorbs both microeconomic factors, such as family characteristics variables and demographic variables, and the macroeconomic variables, the level of financial development, this variable is the thesis’s center.Thirdly, the statistical method. We apply mean analysis to explain the status of household financial market participation and financial asset structure。Compared with the previous papers, there also will be some innovations:Firstly, micro data and macro perspective. Many domestic research of household financial assets selection behavior are often based on macroeconomic data, or relatively small sample set. Based on the latest data of the CHFS, an econometric models is established to research household financial assets.In previous literature, household financial assets model are configured mostly micro factors, such as family characteristics, demographic characteristics, this paper focuses on macroeconomic factors-financial development.Secondly,the macro variables microscopic. This thesis use the number of bank branches per10000populations as the financial development alternative variables. Thirdly, the comprehensiveness of the scope of the study. Analysis of household financial asset allocation, including not only the formal financial market, but also extended to the informal financial market; choose alternative financial development variable, not only from indirect financial perspective to select the number of bank branches per10000populations as financial development alternative variable but also use sales department per10000populations for robustness test; and not only from direct financial perspective; but also from informal financial perspective.Also, because of the my own Academic ability, some shortages exists:First, the established model is not perfect. Health condition and liquidity constraints also play an important role in the household financial assets selection, but because of the sample’nonavailabilities to these data, in the model, these variables are not contained; Second, the data the thesis used is the cross-sectional data, endogenity often occurs. This thesis uses the county (district) per million bank, to the maximum extent to avoid the unfavorable effect of endogeneity.