A Comparison Of China’s Household Financial Behavior With America

In recent years, some progress have been made in the area of household finance research. However, most of these studies are about developed countries, the few focus on the comparison between China and some developed country are limited to qualitative analysis. Household financial behavior would be influenced by demographic factors, because of national differences, the same demographic characteristic has different impacts on households in different countries. Therefore, on the basis of the comparison of household financial behavior between China and America, this paper focus on factors which influence Chinese households and American households differently, and it aims to explain these differences.This paper defines household financial behavior in two parts:household portfolio choice and household debt, and it uses both theoretical and empirical method. Firstly, this paper generalizes relevant theories about household financial behavior, then it makes a comparison between China and America about the structure of household financial assets and debt level. After that, this paper examines determinants of household financial risk preference and debt level of China and America, respectively. What’s more, I explain why those determinants have different impacts on China and America. As for empirical method, I use probit model to test factors affecting the probability of households to choose risk financial assets and liabilities, and a tobit model was applied to exam whether these factors influence the share of risk financial assets and debt level.The results of theoretical analysis and empirical research show that in a large degree, the difference in economic development level, capital market environment and the social security system cause different household behavior between China and America. Meanwhile, age, education and other demographic factors also significantly affect household financial behavior, but they have different impacts on these two countries. In addition, demographic factors, consumption habit, real estate and other factors contribute to household debt levels, and the combined effect of these factors causes the differences in household debt behavior between China and America.According to the main conclusions, this paper have some suggestions, such as optimizing capital market, improving education, developing a sound pension plan, and ensuring the healthy development of real estate market and encouraging micro-credit, etc.