The Impact of Financial Knowledge on the Allocation of Household Assets - Evidence from China

Abstract

This paper studies the impact of family finance knowledge on household asset allocation through China Household Financial Survey Data (CHFS). The study found that the increase in family financial knowledge will significantly increase the diversity of household asset allocation and promote more family participation in financial markets. This conclusion is still significant after being subdivided into money market and capital market. In addition, this paper also finds that household purchase of self-owned housing has a significant crowding out effect on its investment financial market. The increase in education level and risk appetite will increase the diversification of household asset allocation, and the ability of households from rural areas in China to take risks is lower, its assets are mostly deployed in the lower risk currency market.