A Study On The Causes Of "Limited Participation" In Chinese Stock Market

Since 30 years of reform and opening up,China's capital market has unceasingly improved,the supply of risky assets have unceasingly increased,and the demand of assets allocation has become strong.But household risky assets share has been at a low level and some household totally do not participate in risky assets market represented by stock market,this phenomenon is called the "limited participation" puzzle of stock market by economists.Under the background of the change of social financing structure from indirect financing to direct financing,China household's low stock market participation has become the key factors restricting the further development of capital market.This paper bases on China's specific factors,namely number of siblings,experience of great famine and possession of commercial health insurance,to explain china's "limited participation" puzzle of stock market.Firstly,this paper utilizes the micro data from China Family Panel Studies to examine the relationship between number of household head's siblings and household stock investment.The conclusions are as follows.Firstly,the number of non-only-child household head's siblings has a negative effect on the household stock market participation and the only-child identity exert a negative effect on the household stock investment.Secondly,the more siblings,the lower education level household head has,and then inhibiting stock market participation.Finally,along with the improvement of education level,the number of non-only-child household head's siblings will enhances the suppression effect of household involvement in the stock market,and the onlychild identity of household head will also enlarges the inhibition effect of holding more stock.And when the head of household had been helped by their parents,or when the head of household has lower risk aversion,the negative effect of the only-child identity of household head on the ratio of stock to total asset will decreases.Secondly,this paper utilizes the micro dataset from CFPS and constructs a difference-in-differences model to analyze the effect of experiences of the Great Famine in household heads' early life on the decision of family stock investment in their adulthood.Our major findings are as follows.First,the experience of famine in early childhood has no effect on the stock allocation of the household,but the experience of famine in fetal or infant period has mixed negative effect on the stock investment of household.Second,after separating the effect of infancy,the effect of the experience in fetal period remains significantly negative.Third,compared to non-party members,the experience of the great famine has weaker effect on the offspring of the Communist Party members.In addition,when comparing people of different gender,we find no significant differences of the effect of famine experience on their stock investments.Last but not least,victims of the experience of great famine tend to embrace traditional values more tightly,thus decrease their degree of openness,and inhibit their household's stock investment.Thirdly,This paper utilizes the micro data from 2012 CFPS to examine the influence of commercial medical insurance on the behavior of household financial risky asset holding.The conclusions are as follows.First,commercial medical insurance significantly improve household stock market participation and the share of households financial risky asset holding.Second,this influence only exists among urban households but not rural households.Last but not least,in terms of stock market investment,there appears to be no obvious interactions between commercial medical insurance and social medical insurance,holding the social medical insurance will not change the influence of commercial medical insurance on stock investment.The research of this paper has important theoretical significance for understanding households financial behavior under uncertainty.At the same time,this paper also provides instructive policy recommendations to promote the interrelated development between the insurance industry and the securities industry and to facilitate the development of asset management business of financial institutions.