The Impact Of Risk Preference On Household Asset Allocation

Risk preference refers to people’s inner preference for the consequences of their actions(such as economic loss,benefit or no negative impact)when they are faced with unpredictable risk situations.Previous studies have shown that risk appetite is relatively stable and has a profound impact on investor behavior.Family asset allocation is not only the choice of assets,but also the investment decision of families.Under the background of China’s economic development in the new era,residents’ participation in the financial market has increased,and the research on household financial asset allocation behavior has also become one of the hot issues.Exploring the impact of risk preference on household financial asset allocation has strong practical significance.However,there are two problems: it is difficult to measure risk preference and it is difficult to obtain micro data at the family level.China family tracking survey(CFPS)provides a data basis for exploring the impact of personal risk preference on family asset allocation behavior and provides data support for this study.Using the data of the 2018 national household tracking survey(cfps2018),this paper explores the impact of risk preference on household asset allocation behavior from a micro perspective.Firstly,based on previous studies,this paper combs the research on risk preference and household asset allocation,summarizes the connotation of core concepts and the relationship between variables,and then puts forward empirical research hypotheses.Secondly,it constructs logit model,carries out empirical analysis and robust test,and further studies the heterogeneity of risk preference affecting household asset allocation;Finally,explore the mechanism of risk preference on household asset allocation effect.The results show that:(1)risk preference has a positive effect on family participation in risk assets;(2)Risk preference enhances the willingness of families to participate in risky assets by reducing credit constraints;(3)Families with different incomes,regions and financial literacy have heterogeneous effects on their risk assets.Based on the above research results,this paper puts forward corresponding policy suggestions combined with the development status of institutional investors in China’s securities market.Including: popularizing financial knowledge,improving the household risk preference survey system,and improving relevant social security.