The Impact of China’s Population Ageing on Household Financial Asset Allocation

Haidong, Yuan (2024) The Impact of China’s Population Ageing on Household Financial Asset Allocation. PhD thesis, Universiti Malaysia Sarawak.

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The acceleration of population ageing in China will inevitably increase the burden of social old-age care and have significant impacts on the development of financial markets. The rational allocation of financial assets can enable households to acquire more property income and facilitate the appropriate allocation of social capital. Meanwhile, population ageing is a critical factor influencing the financial asset allocation of households. This study investigates the impact of population ageing on household financial asset allocation using data from the China Household Finance Survey (CHFS) in 2015, 2017, and 2019. From previous research findings, empirical studies specifically focused on China, particularly those utilizing micro level household data, are still in their nascent stage, with limited research outcomes. Furthermore, this study introduces financial literacy as a moderating variable and risk attitude as a mediating variable, aspects that have been relatively less explored in existing literature. The study finds that ageing has a significantly negative effect on the allocation and depth of household risky financial assets. After conducting a robustness check using a two-way fixed effects model, the conclusion remains robust. This study investigates the influencing mechanisms from two perspectives: risk aversion and financial literacy. From the perspective of the mediating variable, ageing enhances the risk aversion of household heads, which in turn inhibits household investment in risky financial assets. From the perspective of the moderating variable, the inhibitory effect of ageing on investment in risky financial assets gradually weakens with the improvement of financial literacy. In addition, household savings are the premise and foundation of investment. This study examines the impact of population ageing on household savings rates using micro-level household data in China. The regression results based on a two-way fixed-effects model show that ageing has a significant negative effect on household savings rates. This indicates the existence of significant lifecycle effects in the changes of household savings rates in China. The robustness of the conclusion is confirmed after replacing the calculation method of the explained variable. The findings of this study provide empirical evidence for the financial asset allocation behaviour of micro households from the perspective of population ageing. This offers a basis for policymakers to make informed decisions and enhance decision making effectiveness, as well as laying a solid foundation for future research.

Item Type: Thesis (PhD)
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Depositing User: YUAN HAIDONG
Date Deposited: 26 Feb 2024 01:56
Last Modified: 26 Feb 2024 03:29

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