Research On The Impact Of Financial Literacy On The Effectiveness Of China's Urban Family Asset Portfolio

With the rapid development of China's economy and society,urban families are getting richer and richer,and the financial products in China's financial markets are becoming more diverse and complex.How to effectively allocate family assets affects not only the stable and sustainable growth of family assets but also the sustainable development of the financial market and high-quality socio-economic development.Therefore,it is of practical significance for families,markets and society to research on the internal impact of family investors' financial literacy on household portfolios.First of all,this thesis analyzes the current situation of household finance in China and finds that there are problems such as irrational asset allocation and low financial literacy of household investors.Second,based on the life cycle hypothesis,planned behavior theory,and behavioral finance theory,this thesis analyzes the impact of financial literacy on financial behavior and further elaborates the mechanism by which financial literacy affects the effectiveness of asset portfolios through asset portfolio returns and asset portfolio risks.Finally,using the 2012 consumer finance questionnaire data from Tsinghua University,this thesis constructs the measurements of the subjective financial literacy,objective financial literacy,and financial literacy cognitive bias of family investors and utilizes the Sharpe ratio based on index substitution method as an index of the effectiveness of the household asset portfolio using index substitution.The effects of subjective financial literacy,objective financial literacy,and financial literacy cognitive bias on the effectiveness of China's urban household asset portfolios are empirically studied using the OLS and Tobit models.The study finds that the subjective financial literacy and objective financial literacy of family investors can significantly improve the effectiveness of the family asset portfolio.The importance of subjective financial literacy and objective financial literacy depends on the subjective view of family investors on real estate investment.There is an inverted U-shaped relationship between literacy cognitive bias and the effectiveness of family asset portfolios.This thesis proposes the following policy recommendationsthe: first,government is supposed to not only vigorously promote financial knowledge education and improve the objective financial literacy of family investors,but also pay attention to subjective financial literacy,supervising investors to finish timely and accurate self-assessment and avoid overconfidence and underconfidence.Second,family investors are advised to rationally allocate family assets,arquire financial suggestions from professionals.Third,financial institutes are recommended to appropriately lower the investment threshold,develop diverse financial products and build a rich financial market.