What Is The Impact Of Higher Education Expansion On Household Financial Risk Asset Allocation?

Households are the main suppliers of funds in the financial markets and are the basis for their formation.The allocation of household risk financial assets not only affects the welfare of individuals and the wealth of households,but also has an important impact on the construction of national financial markets.In this context,it is important to explore the study of the impact of the development of higher education on household risk financial asset allocation for the safety of household assets and the healthy development of financial markets.Based on data from the 2015,2017 and 2019 CHFS,this paper examines the causal effects of higher education and financial risky asset investment behaviour in terms of household financial risky asset investment participation and asset allocation,using the implementation of the university expansion policy as a quasi-natural experiment.When the higher education expansion policy was implemented,there was a significant increase in the higher education access rate for the sample affected by the policy,while the household financial risky asset investment behaviour also changed as a result of the change in the higher education acquisition rate.This paper therefore uses Fuzzy Regression Discontinuity Design to estimate the impact of higher education by comparing the changes in household risky financial asset allocation between the sample group affected by the policy and those not affected by the policy.The regression results suggest that acquisition to higher education significantly drives more households to become more involved in financial markets.At the same time,although the higher education expansion policy significantly increased higher education acquisition and hence household participation in financial markets,there was no significant change in the share of each household’s financial market allocation to equity and risky assets.Further mechanistic analysis revealed that higher education had an impact on household financial market participation through two main channels: increasing the financial awareness of the sample and income levels.The results of the heterogeneity analysis found that the impact of higher education on household allocation to risky financial assets varied significantly between urban and rural areas and between households with different numbers of houses.Acquisition to higher education had a significant impact on financial market participation for urban households,but had little impact on rural households.The impact of higher education on risky financial asset allocation is more pronounced for households owning one property.The findings of this paper suggest that the higher education expansion policy,which has boosted the nation’s higher education acquisition rate and enabled more residents to pursue higher education,has helped raise residents’ financial awareness level and income level,promoting more households to participate in the financial market and thus broadening residents’ investment channels.The improvement in human capital and the broadening of investment channels brought about by higher education levels help residents to use different investment tools flexibly and allocate risky and risk-free assets rationally,so as to achieve the safety and preservation of household assets.The existing domestic literature has explored its impact on household risk financial asset allocation from many perspectives,but no article has yet explored the role of education from the perspective of higher education.This paper expands on this research by exploring the causal relationship between higher education and the allocation of risky financial assets of Chinese households,taking advantage of the exogenous policy shock of China’s higher education expansion.