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Digital financial inclusion development, investment diversification, and household extreme portfolio risk

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  • Xiaomeng Lu
  • Jiaojiao Guo
  • Hailing Zhou

Abstract

Most Chinese households are exposed to extreme portfolio risks; the findings show that digital financial inclusion significantly mitigates this phenomenon. Using a panel of nation‐wide data from the China Household Finance Survey, we find digital financial inclusion significantly reduces the probability of households taking extreme portfolio risks by promoting diversification. It also plays a greater role among households with low levels of wealth and financial literacy, located in areas where traditional finance has been slow to develop. These findings suggest that Internet‐based financial products are needed that are better suited to households with low levels of wealth and financial literacy.

Suggested Citation

  • Xiaomeng Lu & Jiaojiao Guo & Hailing Zhou, 2021. "Digital financial inclusion development, investment diversification, and household extreme portfolio risk," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(5), pages 6225-6261, December.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:5:p:6225-6261
    DOI: 10.1111/acfi.12863
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    Cited by:

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    2. Evgenii Zimin & Maria Semenova, 2022. "Profitability And Bank De-Branching In The Digital Age: Evidence From Russian Regions," HSE Working papers WP BRP 90/FE/2022, National Research University Higher School of Economics.
    3. Mohamed Hossameldin Khalifa & Hassan El-Sady & Vasilya Sultanova, 2023. "Does Financial Inclusion Enhance Economic Output? Evidence from North Africa," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 12, March.
    4. Yong Bian & Xiqian Wang & Qin Zhang, 2023. "How Does China's Household Portfolio Selection Vary with Financial Inclusion?," Papers 2311.01206, arXiv.org.
    5. Ozili, Peterson K, 2022. "Digital financial inclusion," MPRA Paper 113789, University Library of Munich, Germany.
    6. Azra Zaimovic & Anes Torlakovic & Almira Arnaut-Berilo & Tarik Zaimovic & Lejla Dedovic & Minela Nuhic Meskovic, 2023. "Mapping Financial Literacy: A Systematic Literature Review of Determinants and Recent Trends," Sustainability, MDPI, vol. 15(12), pages 1-30, June.

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