A Study Of Social Network And Urban Household Stock Market Participation In China

With the development of China's economic and finance,the total social wealth and residents' income are increasing.As the basic unit of society,family how to carry out asset allocation in order to achieve its wealth goals is increasingly draw the attention of public.Nowadays,China's financial market is being geared to international standards,more and more financial products are coming into people's sight.As a result,the proportion of financial assets in family assets is gradually increasing.China's families begin to invest in stocks,funds,futures,precious metals,and some other risk assets.But compared with developed countries in America and Europe,saving still holds the dominant position in Chinese household financial asset,Chinese household asset allocation apparently shows the characteristics of lower risk level and heterogeneity.The traditional theory of capital asset pricing shows that every family will invest a certain percentage of its wealth in risk asset to obtain high return,and the proportion of investment depends on only its risk attitude.However,the fact do not fit the theory.This paper tries to analyze the impacts of social network on the stock participation rate of Chinese urban families.Based on the microeconomic data from 2011 "China Household Finance Survey"in 2011 and by means of instrumental variable "other household holiday average gift spendings",this paper is an empirical analysis of the influence of social network on the stock participation rate of urban families.The regression results show that the holiday spendings and communication costs of social network have a significant positive impacts on the urban families' participation in the stock market after controlling the irrelevant variables such as householder characteristics and family characteristics.The higher the expenditure on the household social network,the greater the possibility of entering the stock market.The conclusions of this paper show that the social characteristics and social structure can not be neglected on the way to capital market structure and development.As one of the important basic micro-subject,family's active participation contributes a lot to China capital market development.Therefore,the government should work out financial policies comprehensively and thoroughly in consideration of different effects of policies on the families in different social networks so as to promote the long-term and sound development of China's capital market.