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Risk-sharing networks, consumption, and asset allocation: Micro-evidence from China

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  • Fan, Ying
  • Wang, Yidi
  • Yang, Zan

Abstract

Kinship networks play an important role in sharing risk under insufficient social security. We examine the heterogeneous risk-sharing networks and their impacts on household finance. Based on a staggered DID design, we find that households under negative shocks obtain a larger extent of social capital from extended family members with blood ties and geo-proximities, similar income positions, and lower uncertainty exposures. The vehicles of risk-sharing differ across networks, and direct monetary transfers over quasi-credits are facilitated by altruism and social norms. However, over-reliance on risk-sharing networks reduces willingness to engage in life-cycle financial planning and dampens long-term financial performance.

Suggested Citation

  • Fan, Ying & Wang, Yidi & Yang, Zan, 2025. "Risk-sharing networks, consumption, and asset allocation: Micro-evidence from China," Emerging Markets Review, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:ememar:v:66:y:2025:i:c:s156601412500038x
    DOI: 10.1016/j.ememar.2025.101289
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    Keywords

    Risk-sharing networks; Consumption; Asset allocation; Financial planning; China;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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