Household Stock Investment Behavior and Financial Asset Risk: Evidence from China

Using the 2013 micro data from CHFS, this study analyzes the relationship between household stock investment behavior and household financial asset risk. The empirical results show that there is a significant negative correlation between the average holding period of household stocks, the profitability of household stock investment, and household financial asset risk. On the other hand, there is a significant positive correlation between the initial investment amount of stocks, the use of personal, office, or bank computers for stock investment, the number of stocks invested in, and the head of household being the primary decision-maker for stock investment and household financial asset risk. However, the relationship between other explanatory variables, including the duration of household participation in stock investment and the ownership of non-public market stocks, and household financial asset risk is not clear statistically. The regression results of this study can effectively help households reduce financial asset risk, especially for those who participate in the stock market. The conclusion suggests that to lower household financial asset risk, it is not only necessary to control the amount invested in stocks reasonably but also to discuss and learn from peers and professionals, as individual investment decisions have the highest risk.