The Impact Of Internet Financial Behavior On Household Asset Allocation In China

With the increase of residents’ income in China,household financial assets are growing rapidly,and financial assets play an increasingly important role in household asset allocation.In recent years,with the popularity of the Internet and the development of communication technology,the term Internet finance has begun to appear in the public eye.Based on this new financial model of Internet finance,what impact will the changes in residents’ financial behavior caused by it have on their financial asset allocation?This paper will study the impact of Internet financial behavior on the allocation of financial assets of Chinese residents based on the 2019 China Household Financial Survey(CHFS)data.First,this paper will carve out the Internet financial behavior in China,starting from the household level and using principal component factor analysis to construct an Internet financial behavior index from four perspectives:digital payment,digital finance,digital lending,and digital life,and then conduct statistics on the Internet financial behavior index of each household,and the statistical results show that more than half of the households in China have a low Internet financial behavior index.Then,referring to the classification of household financial assets by CHFS and WECC,Chinese households are classified into cash deposits,equity products,commercial insurance,financial products,lending,funds and other financial assets,and through the rapid clustering method,the types of household financial assets allocation in China are divided into five major categories,which are cash deposit-led,commercial insurance-led,equity products-led,financial products-led,and lending-led.The types of household financial asset allocation are cash deposit-led,commercial insurance-led,equity products-led,financial products-led,and lending-led.Then it is to use a multinomial Logit model to study the impact of Internet financial behavior on household financial asset allocation,controlling for household head characteristics variables,household characteristics variables,and regional characteristics variables,with cash deposit dominant type as the base group.Then,the endogeneity and robustness of the baseline model are tested to make the model more convincing.Then,considering that there are differences in the education level,region of residence,and income level of household heads,we investigate whether there is heterogeneity in the Internet financial behavior on household financial asset allocation.Finally,the transmission mechanism of this effect is tested through a mediating effect model.The findings of the study show that(1)the increase in the index of Internet financial behavior makes households more likely to choose to become equity-dominant,lending-dominant,and financial product-dominant compared to cash deposit-dominant,while the effect is not significant for commercial insurance-dominant households.(2)For households with low years of education,rural and mid-western areas,and low-income level,the impact of Internet financial behavior on household financial asset allocation is more significant,and the likelihood of choosing equity products,lending,and financial products-led type is higher.(3)In terms of the transmission mechanism,the increase in the index of Internet financial behavior promotes the increase in household income level,which in turn makes residential households more likely to choose the asset allocation structure of equity-based products-led,lending-led,and financial products-led types,while this mediating effect is not significant in the commercial insurance-led type.Finally,based on the aforementioned findings,this paper puts forward several policy recommendations to further optimize the financial asset allocation structure of residential households in China.