| Over the past decade, a number of contributions have re-examined the life-cycle behavior of investor portfolios, and household portfolio choice(including stock market participation, investment share changes and influencing factors, etc.) has been the focus of household finance. But the present empirical findings of financial portfolio is rare and un-systemic in China. The domestic literature research will be followed the breakthrough of the analysis of household finance in a macroscopic perspective, towards the microscopic attribute variables(age, gender, level of education, wealth, etc.). The expectation of domestic house price has soared in the past ten years. The increasing investment demand in housing crowds out stock-holdings, and this crowding out effect is larger in Chinese urban families with the same financial net-worth. Human capital, another main type of wealth over their lifetime, also remarkably influences the household portfolio decisions, but few researches in this field are conducted in China.This article analyses financial portfolio of the urban families in China from the micro perspective. We examine the dynamic portfolio decisions for investors who acquire housing services from either renting or owning a house by building Tobit model respectively. In this paper, using the data from the CHFS(China Household Finance Survey) of 2011, we make an empirical analysis of the household structure of assets and liabilities, lifetime portfolio decisions in China and the influencing factors. I show that investment in housing plays a crucial role in explaining the patterns of cross-sectional variation in the composition of wealth and the level of stock-holdings observed in portfolio composition data. Due to investment in housing, investors have limited financial wealth to invest in stocks, which reduces the benefits of equity market participation. In this thesis, we concern about how do Chinese household portfolio allocation changes with age? And, housing as a "risk-free" asset in Chinese household, we mainly focus on how do portfolio decisions rebalancing over the life-time in the presence of housing?In the results of the empirical analysis, participation shows a pronounced hump-shaped profile as well as the risky share and is limited at all ages. It rises rapidly for the young, reaching a value and stays roughly constant until retirement. The evidence suggests two effects. First, as they approach retirement, households start exiting the market, but the conditional risky share continues to rise for the families who stay in the market. Second, after retirement, families reduce their risky share, and rebalance their portfolio away from stocks. Housing and human capital, which are the most important assets in lifetime wealth of most households, they may have significant effects on the investment of stocks. Unlike the results of empirical literature research abroad, Chinese family has a relatively higher share of stocks participation and real-estates invest share. Except the participation of owning houses needs certain cost, real estate is more like "perfect" asset with high-rate of return and low-risk. This paper presents the Tobit estimates for investors who acquire housing services from either renting or owning housing. At the same time, we distinguish home equity wealth and mortgage debt, as they may have opposite-signed effects on portfolio. Our results show that home equity has a significantly negative impact on stocks proportion both in their liquid portfolio(bonds and stocks) and net-assets, reflecting the crowding out effect. The families increase stocks proportion in their liquid portfolio only when their liquid assets are made to the same level. Although housing plays a crucial role in explaining the level of stock-holdings, mortgages are not a significant impact. And another component of household wealth--human capital:family which holds a higher human capital in their net-worth, is less likely to participate stock market and the investment share reduces at the same time. |
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