Special Issue on Financial Inclusion, Financial Stability and Income Inequality; Guest Editors: Naoyuki Yoshino, Asian Development Bank Institute and Peter Morgan, Asian Development BankNo Access

INSURANCE INCLUSION, TIME PREFERENCE AND STOCK INVESTMENT OF THE CHINESE HOUSEHOLDS

YINAN YANG

School of Public Administration, South China University of Technology, Guangzhou, China

Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, China

E-mail Address: yangynan@scut.edu.cn

Corresponding author.

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QIAN WANG

School of Public Administration, South China University of Technology, Guangzhou, China

Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, China

E-mail Address: wangq_doris@sjtu.edu.cn

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https://doi.org/10.1142/S0217590817440039Cited by:6 (Source: Crossref)

Abstract

Using the China Household Finance Survey data in 2011, the estimation results of structural equation modeling demonstrate that the respondents with higher time preference rate have a significant higher probability of investing in stocks, which implies that the short-term households will prefer stock investment. The social insurance programs and insurance policies held by the family will have a significantly direct positive effect in promoting stock investment and also a significantly direct positive effect on the respondent’s time preference, which could further indirectly increase the family’s stock investment. These results show that the safety-net built by the Chinese government, including the social security and commercial insurance, is very likely to attract more short-term investors into the stock market. These empirical results provide new evidences to explain the extreme volatility of Chinese stock market and also testify the policy effect of building an environment for people to possess property income in China.

Keywords:

JEL: G22, G23, G11

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