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Financial Planning Ability, Risk Perception and Household Portfolio Choice

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  • Dekui Jia
  • Ruihai Li
  • Shibo Bian
  • Christopher Gan

Abstract

Using data from the 2014 China Family Panel Studies survey (CFPS), we investigate the effects of financial planning ability and risk perception on household portfolio choice. Our findings show that households with greater financial planning ability are more likely to invest in financial markets and hold a larger proportion of risky financial assets. The empirical results suggest that a higher level of risk perception leads to more market participation and risky assets holding. Compared with the insignificant effect of financial literacy, we find that financial planning ability significantly affects household investment earnings, and high financial planning ability tends to contribute to a positive investment return.

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  • Dekui Jia & Ruihai Li & Shibo Bian & Christopher Gan, 2021. "Financial Planning Ability, Risk Perception and Household Portfolio Choice," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(8), pages 2153-2175, June.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:8:p:2153-2175
    DOI: 10.1080/1540496X.2019.1643319
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