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Social interactions and Chinese households’ participation in the risky financial market

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  • Li, Qize
  • Brounen, Dirk
  • Li, Jianjun
  • Wei, Xu

Abstract

This paper explores how social interactions affect households' financial investment. Employing the data from the 2018 China Family Panel Studies (CFPS), we construct two indices of social interactions and find that social interactions are positively related to households’ participation in risky financial market. Furthermore, this effect is more pronounced among households with limited channels of obtaining information, such as those who have an older age or a lower level of education, and less pronounced for households who mainly depend on the internet to obtain information. Our results suggest that social interactions may have an effect by providing more related information.

Suggested Citation

  • Li, Qize & Brounen, Dirk & Li, Jianjun & Wei, Xu, 2022. "Social interactions and Chinese households’ participation in the risky financial market," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s1544612322003658
    DOI: 10.1016/j.frl.2022.103142
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    Cited by:

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    2. Chen, Bo & Zeng, Ning & Tam, Kwo Ping, 2024. "Do social networks affect household financial vulnerability? Evidence from China," Finance Research Letters, Elsevier, vol. 59(C).
    3. Wenyan, Huang & Gooi, Leong-Mow, 2023. "Social support and household stock market participation," Economics Letters, Elsevier, vol. 233(C).
    4. Lu, Xiaoyu & Gui, Zhou, 2024. "An study of liquidity shock, financial market participation on hollowing behavior of controlling shareholder," Finance Research Letters, Elsevier, vol. 61(C).

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