Chinese Pension Insurance, Risk Attitudes, and Household Asset Allocation
By Hua Chen, Han Xiao, Yunxiao Guo & Ding Li
Optimising household asset allocation is vital for expanding domestic demand in developing countries. This study uses 2017, 2019, and 2021 China Household Finance Survey (CHFS) data to explore pension insurance’s effect on asset allocation among Chinese households. Key findings include that higher pension balances encourage investments in riskier assets. Specifically, for every 10% increase in pension account balances, the likelihood of investing in the risk asset market rises by 5%, and allocation to risk assets grows by 1.7%. Significant differences in the impact of pension insurance on asset allocation are observed across urban-rural and regional divides, particularly affecting rural and western households. Moreover, higher pension balances correlate with a stronger preference for risk, leading to an increased investment in risk assets. This highlights the role of pension insurance in shaping investment behaviors and risk attitudes, emphasizing its significance in financial planning and policy-making.
Source SSRN
