Financial Exclusion,Sociability And The Households' Financial Assets Allocation

With the development of domestic economy,the scale of financial market continues expanding.Household,as the basic unit of society,also accumulates more and more wealth,the demand for the rational use of financial instruments to manage wealth is gradually increasing.The rational and effective allocation of financial assets,on the one hand,can smooth the mismatch of household income and expenditure in different life stages,which is conducive to the households to formulate a reasonable budget plan,maintain financial balance of payments,and improve their ability to respond to emergencies.On the other hand,it can promote the effective allocation of social resources and plays a vital role in sharing the fruits of social development and achieving wealth growth for households.In the CHFS2015 survey data,family's participation rate in finance was low and there were obvious regional characteristics.In 36052 households,the proportion participating in financial markets was relatively low,with only 14.47%of households investing in formal financial risk assets.The proportion of households participating in the stock market was 6.92%.The proportion of households holding financial management products,funds and precous metal was 8.54%,3.23%,0.48%,of other financial products was even lower.From different regions,the participation rate of Chinese households in formal finance showed a cascade downward trend from eastern cities,central and western cities to rural areas.The participation rate of informal finance was higher than that of formal finance.but the participation rate of urban households in the east in informal finance was not much different from that of formal finance,and the participation rate in formal finance of urban households in the middle and west was significantly higher than that of formal finance.The allocation of risk assets by rural households was basically concentrated in the private lending money which is outside the formal financial mechanism.It means that households'awareness of asset allocation is not strong and the gap that exists between households in different regions in access to formal financial services may have an impact on household participation in finance.The financial exclusion of families is therefore included in the scope of the study.At the same time,China is a typical "relational" society,social interaction is considered to have a direct impact on individual financial behavior,and is closely related to the private lending chain based on the consanguinity,geo-relation and work relationship,which may be an important driving factor of the "excessive participation" of families in informal finance.Based on this consideration,this paper makes an in-depth study on the influence of financial exclusion and social interaction on the decision-making of household asset allocation.Based on the data of China Household Financial Survey(CHFS)for 2015 years,using probit model and tobit model to focus on the influence of financial exclusion and social interaction on the Chinese households' financial market participation and assets allocation.By adding the interaction into the empirical model,we also examine whether there is heterogeneity in the impact of financial exclusion on household financial behavior in families with different levels of sociability.According to the results of the study,financial exclusion will greatly reduce household participation and asset allocation in formal finance.When it comes to informal finance,on the one hand,financial exclusion will enhance families' precautionary motivation and reduce their risky assets investment.On the other hand,informal finance has less complicated trading mechanism and lower trading threshold than formal finance,and is considered as an alternative when the cost of investing formal finance is too high.Taking all this into consideration,the impact of financial exclusion on informal finance is more difficult to determine.In the empirical sample of this paper,financial exclusion generally suppresses family informal financial participation,but increases theproportion of households in private lending.Social interaction,as an important channel for obtaining financial information,has a significant role in promoting household participation in financial markets and the allocation of risky assets in general.When studying the interaction between financial exclusion and social interaction,we found that social interaction does not regulate the inhibition of financial exclusion on households'financial participation decision-making.When studied the urban and rural subsamples separately,we found that the promotion of socibility to family financial participation is not universal.In urban households,socibility has significant positive impact.But in rural household sample,the utility of social interaction is only obvious in terms of participation in informal finance,its impact on household participation in formal finance is not significant.The main reason is that there is a big gap between urban and rural areas in financial literacy and financial resources.The financial resources in rural area are extremely scarce,and financial exclusion is directly manifested as geographical exclusion.Most in the reference groups of rural households are rural people who have never participated in formal finance,with low financial literacy.There is a significant discount on the effective information provided by reference groups.The conclusion shows that basic financial services are the public goods of modern economic society.Excluded from the formal financial services system,the potential financial needs of households are suppressed,the likelihood of investing in financial markets is reduced,and the process of financial development in depth is difficult to sustain.To get rid of the current situation of "limited participation" of Chinese families in finance,we need to start with relieving financial exclusion.This paper provides a reference for the corresponding policy suggestions from three angles,improving the benign competition of financial supply side,reducing the cost of market information and eliminating the heterogeneity of urban and rural areas.