Disaster Experience And Household Investment In Risky Financial Assets

With the development of Internet technology and national economy,more and more diversified financial products have started to enter the vision of the general population.One of the most important ways to broaden the income of residents is to make financial investments.2023 government work report pointed out that it is necessary to increase the income of urban and rural residents through multiple channels and achieve the basic synchronization between the growth of residents’ income and economic growth.In addition,the government report in 2021 also proposed to further deepen the reform of the financial system,expand the investment and financing channels of market entities,fully exploit the market potential,increase the income of residents through multiple channels and expand the investment space.In addition,the overall income of residents has fluctuated in the past few years due to the repeated impact of the epidemic,and capital market investment has gradually become one of the additional sources of income for the majority of the resident population,so it is important to study which factors can have an impact on the asset allocation of Chinese households.In recent years,there has also been an increase in domestic and international research on household finance,mainly because more and more households are becoming involved in financial investments as the economy develops.Existing studies have found that a variety of factors at the household level can affect household risky asset investment,in addition to disaster experience will also have an impact on the household in many aspects,such as special economic events,famine experience,natural disaster experience,etc.,these factors will have a certain degree of impact on the household asset allocation,and China’s large population base,even if the probability of certain disasters is small,but the specific down to the number is Even if the probability of certain disasters is small,the number is still very large,so the impact should not be underestimated.As for the research on disaster and household risky asset investment,most of the existing literature focuses on other aspects such as household savings or household consumption,and less on household investment,so the research in this paper can enrich the research on the theoretical aspects of household finance.In addition,existing studies also focus more on natural disasters,often ignoring the importance of man-made disasters.In today’s society,both natural and man-made disasters,the number of occurrences and the number of people affected each year is a noteworthy number,so this paper also further focuses on the impact of man-made disasters on household risk assets,and contrastingly analyzes the impact of natural and man-made disasters on household risk financial assets investment.The impact of natural and man-made disasters can also further enrich the study of natural and man-made disaster experiences on household asset allocation decisions.In particular,since natural and man-made disasters are frequent in China,the research in this paper can provide a new perspective for the government and other organizations in China,and can contribute to a certain extent to help households that have experienced natural and man-made disasters to make reasonable asset allocation decisions.Therefore,this paper starts from the perspective of disaster experience,based on natural and man-made disasters that occurred in the past,and uses data from the China Household Financial Survey 2019 to conduct a study to analyze the different effects of different disaster experiences such as natural and man-made disaster experiences on household financial risk asset investment,mainly using Probit and Tobit models for regression analysis,and the study finds that different disaster experiences have different effects on risk The study finds that different disaster experiences have different impacts on the investment outcomes of financial assets,and further compares and analyzes that natural disaster experiences significantly reduce household investment in risky assets,while man-made disaster experiences are not significantly affected.The paper further investigates the mechanism and finds that the experience of natural disasters significantly reduces households’ economic expectations,but man-made disasters do not have a significant impact,and similarly,households that have experienced natural disasters focus more on precautionary savings than those that have experienced man-made disasters,ultimately reducing households’ participation in risky assets.This paper also conducts robustness checks by various methods such as adjusting the sample period,lagging the sample household asset variables,and analyzing various possible scenarios such as consumption scenarios and household financial insolvency scenarios,thus proving the robustness of the paper’s results.The findings of this paper contribute to further understanding of the different effects of natural disaster experiences and man-made disaster experiences on household risky financial asset allocation,provide understandable institutional pathways,and offer relevant insights for the formulation of policies related to household investment.