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The Effect of Housing Wealth on Household Portfolio Choice

Author

Listed:
  • Qize Li

    (Chinese Academy of Social Sciences
    TIAS School for Business and Society, Tilburg University)

  • Dirk Brounen

    (TIAS School for Business and Society, Tilburg University)

  • Jianjun Li

    (School of Finance, Central University of Finance and Economics)

  • Xu Wei

    (School of Finance, Central University of Finance and Economics)

Abstract

This study uses data from the 2013 China Household Finance Survey (CHFS) to investigate the effect of housing tenure decisions on households' portfolio choices. We find that property value has a significantly positive impact on the extent to which households hold risky financial assets. Furthermore, this impact is mitigated in households that do not have full property rights over their homes, and housing characteristics that increase transaction costs reduce the proportion of households with risky financial asset holdings. These results indicate the presence of a wealth effect on households' portfolio choices.

Suggested Citation

  • Qize Li & Dirk Brounen & Jianjun Li & Xu Wei, 2022. "The Effect of Housing Wealth on Household Portfolio Choice," Annals of Economics and Finance, Society for AEF, vol. 23(2), pages 253-277, November.
    • Handle: RePEc:cuf:journl:y:2022:v:23:i:2:li:brounen:li:wei
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    More about this item

    Keywords

    Housing portfolio choices; Housing wealth effect; Financial market participation;
    All these keywords.

    JEL classification:

    • G50 - Financial Economics - - Household Finance - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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