Risk Attitude And Household Financial Portfolio

Since the reform, china household financial assets have a great change:the proportion of financial assets in the household property is increasing; residents are investing heavily in funds, precious metals, stocks, bonds and other financial products, so as to get the property income, which gradually become an important source of household income. So household financial assets have risen sharply, and the combinations of asset are also increasingly diverse. Now, More and more domestic scholars study the issue of household financial portfolio from different view.There are many factors that can impact household financial portfolio.The paper mainly study the effect of risk attitude on household financial portfolio and study the situation of family involved in financial market in different risk attitudes. According to the division of risk attitude, the residents can be divided into three types:risk neutral、risk averse and risk appetite.From the theoretical perspective:the portfolio theory of Markowitz has expanded greatly. However, the theory and its branch also have certain insufficiency. These theories all follow the assumptions:residents make rational analysis between investment decisions and tradeoffs, and pursuit of the biggest utility of investment activities, so the risk attitudes of investors to hold are averse. Portfolio theory ignored the heterogeneity of investors’ risk attitude. Therefore, so the paper use questionnaire answers to classify risk attitude:residents’ attitude towards risk can be divided into risk appetite, risk averse and risk neutral. And this paper use Probit model and Tobit model to analyze the impact on the household financial portfolio because of residents’ attitude towards risk.In specific study, this paper adopts the data of CHFS. First of all, household participation of financial market, the participation of folk lending market situation as well as the configuration of the risky assets are described. Then according to the respondents of related question, the participants’ risk attitude can be divided into risk appetite, risk averse and risk neutral. And the paper analysis of the three kinds of participants’ involvement of stock markets, involvement of folk lending market as well as the configuration of the risky assets. The conclusion is the higher the risk preferences of the family the greater the chance to participate in the stock market and folk lending market, and the higher the proportion of risky assets. The results also show:the lower the risk preferences of family, the less the chance to participate in the stock market and folk lending market, and the less the proportion of risky financial assets.In order to further study the effect of risk attitude to household financial portfolio, the explained variable is set to:whether the residents to participate in the stock market, whether the residents participate in folk lending market, the depth of stock market participating and the proportion of risky assets. Risk attitude is the explaining variable in this paper. And the paper selectees the residents’ wage income, financial asset, age, level of education, gender, marital status, family size, rural or urban and the geographical distribution as control variables. Then, the article uses the Probit model to analyze whether risk attitude have a significant effect on probability of residents participating in the stock market and folk lending market or not. The empirical results show:the stronger of family risk preferences the bigger the possibility of participating in the stock market and folk lending market. And the article uses the Tobit model to analyze whether risk attitude have a significant effect on household stock assets and risky assets or not. The empirical results show:the stronger of family risk preferences, the greater stock assets and risky financial assets proportion of household financial assets.According to the analysis, the article finally proposed author’s some advice:1.The government should undertake the propaganda and education of financial knowledge and make the residents establish a rational investment philosophy; financial institutions should also arrange professional personnel on a regular basis to investors for the interpretation of financial knowledge.2. The government should publish relevant policy for the healthy development of capital market and publish relevant laws and regulations to protect the legitimate rights and interests of investors.3.The government should vigorously strengthen the building of the social security system and welfare system, and perfect the endowment insurance, the medical insurance and so on.4. Government shall timely to raise the income level of households to increase their net worth that can be used for investment.5. Financial institutions should design financial products that can meet the demand of residents in our country.