Study On The Influence Of Investor Sentiment On The Household Financial Assets Selection

In recent years,our capital market improves continuouslywith the rapid development of economy.Then more and more resident families will choose finance and investment.They invest their savings on stocks,real estate,bonds and etc.for optimizing asset allocation,instead of simply depositing it into the bank like before.However,as the most basic unit of society,household portfolio and holdings of financial assets play an important role in deepening reform and innovation and social stability.As a result,many domestic experts and scholars attach importance to problems of household choice in financial assets.On the other hand,investor sentiment is also the hot spot in the behavior finance and then many classical literature proves that it has a strong correlation with stock returns and price fluctuation.However,the existing researches of household financial asset selection behavior,with less to investor sentiment,emphasize more on micro level such as health,education,marital status and other family characteristics where it uses CHFS data and combines Probit Model with Tobit Model and micro internal factors to analyze.Therefore,it is significant to study the influence of investor sentiment changes on financial asset selection by linking investor sentiment with resident family asset selection.In this paper,firstly,the paper makes a statistical analysis on the changes of actual holdings and the proportion of household financial asset held by “China Statistical Yearbook” and “Annual Report of China People Bank”.A detailed analysis of the great changes in the family property portfolio has taken place and the changes of the investor sentiment in the market will affect the choice of family.Then,asset the concept and classification of investor sentiment are sorted out,relevant proxy index is introduced and selected.Finally,we use Wind database to find relevant data.On the basis of referring to Baker-Wurgler model,this paper illustrates the rationality of sentiment index by using principal components analysis to build comprehensive investor sentiment index and making Shanghai and Shenzhen 300 Index as a reference.On this basis,resident’s financial investment intention can be divided into savings intention,real estate investment intention and purchasing stocks or funds intention.It can analyze whether investor’s emotion changes in market can make change of family asset selection,specific effects and duration by taking advantage of time series data of China People Bank’s every quarter “Urban Depositors Survey Report” from the first quarter of 2013 to the first quarter of 2016,and using Granger causality test and constructing Multivariate GARCH Model,with consideration of family internal consumption intention effects.Through the empirical results,we can draw the following conclusion: firstly,the investor sentiment and consumption intention are not the Grainger reason of savings intention,real estate investment intentionand purchasing stocks or funds intention.But in terms of investor sentiment,it is negatively related with savings intention and is positively related with real estate investment intention and purchasing stocks or funds intention.In terms of consumption intention,it is negatively related with savings intention,purchasing stocks or funds intention and real estate investment intention.Secondly,according to the estimate of mean equation,consumption intention has crowding-out effect on savings intention,purchasing stocks or funds intention and real estate investment intention,especially in 10% and 5%confidence level.Investor sentiment has certain stimulating effect on the real estate investment intentionand purchasing stocks or funds intention and significantly in the 10% confidence level.But it has no special stimulating effect on savings intention.Finally,according to the estimate of condition equation,household savings intention suffers from external influence,which lasts for a long time.When purchasing stocks or funds intention suffers from external influence,which is the fastest response and the shortest duration.According to these conclusions,the following suggestions are offered :firstly,savings deposits of urban residents in our country remain high.But if a great amount of savings are transferred into investment,it can have a positive effect on the development of our country’s economy.As a result,it should continue to improve capital market and provide more financial products for residents to choose.Secondly,household financial asset choices are influenced by external market and family internal consumption.Therefore,it should enhance family financial skills and risk prevention awareness and then guide family rational consumption and investment.Finally,it should improve the social security system and strengthen financial supervision,which can provide a stable environment for household financial asset investment.There are three innovation points in this paper.Firstly,the existing researches on household asset selection are mostly based on micro level and less on macro level to study household asset selection behavior.Therefore,this paper introduces investor sentiment,which can effectively make up for the deficiency in this aspect.Secondly,based on the macro level to study this behavior,it tends to ignore the effect of family internal factors.This paper studies the influence of investor sentiment on household asset selection,meanwhile considering the effect of family internal consumption decision on asset selection results,which can effectively make up for the deficiency in this aspect.Thirdly,combined with our country’s actual situation,we improve BakerWurgler model,add the direct index and change the annual index into the monthly index,eliminate the impact of macroeconomic factors,and then make use of principal component analysis method to build investor sentiment index applicable to Chinese Market.