IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i22p15021-d971730.html
   My bibliography  Save this article

How Does Population Aging Impact Household Financial Asset Investment?

Author

Listed:
  • Haidong Yuan

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Sarawak, Malaysia
    Faculty of Economics and Management, Weifang Institute of Technology, Weifang 262500, China)

  • Chin-Hong Puah

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Sarawak, Malaysia)

  • Josephine Tan-Hwang Yau

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Sarawak, Malaysia)

Abstract

The accelerated aging of China’s population will inevitably increase the burden of social retirement and significantly impact the development of financial markets, which is not conducive to sustainable social development. A proper allocation of financial assets will enable households to earn more property income and facilitate the appropriate allocation of social capital. The aging of the population is an essential factor affecting the allocation of financial assets to households. This paper examines the impact of an aging population on household financial asset allocation based on data from the 2015, 2017, and 2019 China Household Finance Surveys (CHFS). The study finds that aging significantly negatively affects household risky financial asset participation, depth of participation, and diversity. The findings remain robust after robustness tests using a two-way fixed effects model. In addition, this paper examines the mechanisms of influence from the perspectives of both risk aversion and financial literacy. In terms of mediating variables, aging increases the risk aversion of household heads, and an increase in risk aversion discourages households from investing in risky financial assets. In terms of moderating variables, the dampening effect of aging on investment in risky financial assets diminishes as financial literacy increases. In addition, empirical findings based on heterogeneity find that aging has a stronger negative impact on risky financial asset participation, depth of participation, and diversity in rural areas. Aging has a stronger negative impact on risky financial asset participation for households with children.

Suggested Citation

  • Haidong Yuan & Chin-Hong Puah & Josephine Tan-Hwang Yau, 2022. "How Does Population Aging Impact Household Financial Asset Investment?," Sustainability, MDPI, vol. 14(22), pages 1-14, November.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:22:p:15021-:d:971730
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/22/15021/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/22/15021/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Barasinska, Nataliya & Schäfer, Dorothea & Stephan, Andreas, 2012. "Individual Risk Attitudes and the Composition of Financial Portfolios: Evidence from German Household Portfolios," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 52(1), pages 1-14.
    2. Andreas Fagereng & Charles Gottlieb & Luigi Guiso, 2017. "Asset Market Participation and Portfolio Choice over the Life-Cycle," Journal of Finance, American Finance Association, vol. 72(2), pages 705-750, April.
    3. Jappelli, Tullio & Padula, Mario, 2015. "Investment in financial literacy, social security, and portfolio choice," Journal of Pension Economics and Finance, Cambridge University Press, vol. 14(4), pages 369-411, October.
    4. Alessandro Bucciol & Barbara Cavasso & Luca Zarri, 2019. "Can Risk‐Averse Households Make Risky Investments? The Role of Trust in Others," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(1), pages 326-352, January.
    5. Elahi, Ehsan & Zhang, Hongxia & Lirong, Xing & Khalid, Zainab & Xu, Haiyun, 2021. "Understanding cognitive and socio-psychological factors determining farmers’ intentions to use improved grassland: Implications of land use policy for sustainable pasture production," Land Use Policy, Elsevier, vol. 102(C).
    6. Dimitris Georgarakos & Giacomo Pasini, 2011. "Trust, Sociability, and Stock Market Participation," Review of Finance, European Finance Association, vol. 15(4), pages 693-725.
    7. Chen, Tong & Razzaq, Amar & Qing, Ping & Cao, Binbin, 2021. "Do you bear to reject them? The effect of anthropomorphism on empathy and consumer preference for unattractive produce," Journal of Retailing and Consumer Services, Elsevier, vol. 61(C).
    8. Hongxia Zhang & Zixuan Sun & Ehsan Elahi & Yuge Zhang, 2021. "Internet Development, Level of Industrial Synergy, and Urban Innovation," Sustainability, MDPI, vol. 13(22), pages 1-12, November.
    9. Bakshi, Gurdip S & Chen, Zhiwu, 1994. "Baby Boom, Population Aging, and Capital Markets," The Journal of Business, University of Chicago Press, vol. 67(2), pages 165-202, April.
    10. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 25(2), pages 65-86.
    11. Elahi, Ehsan & Khalid, Zainab & Zhang, Zhixin, 2022. "Understanding farmers’ intention and willingness to install renewable energy technology: A solution to reduce the environmental emissions of agriculture," Applied Energy, Elsevier, vol. 309(C).
    12. Elahi, Ehsan & Zhang, Zhixin & Khalid, Zainab & Xu, Haiyun, 2022. "Application of an artificial neural network to optimise energy inputs: An energy- and cost-saving strategy for commercial poultry farms," Energy, Elsevier, vol. 244(PB).
    13. Iwaisako, Tokuo & 祝迫, 得夫 & Ono, Arito & Saito, Amane & Tokuda, Hidenobu, 2016. "Impact of population aging on household savings and portfolio choice in Japan," HIT-REFINED Working Paper Series 61, Institute of Economic Research, Hitotsubashi University.
    14. Pak, Tae-Young & Babiarz, Patryk, 2018. "Does cognitive aging affect portfolio choice?," Journal of Economic Psychology, Elsevier, vol. 66(C), pages 1-12.
    15. Merton, Robert C, 1969. "Lifetime Portfolio Selection under Uncertainty: The Continuous-Time Case," The Review of Economics and Statistics, MIT Press, vol. 51(3), pages 247-257, August.
    16. Elahi, Ehsan & Khalid, Zainab, 2022. "Estimating smart energy inputs packages using hybrid optimisation technique to mitigate environmental emissions of commercial fish farms," Applied Energy, Elsevier, vol. 326(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yujie Wang & Run Ge & Wenjing Gao & Dunzhe Tang, 2024. "How Does Fertility Policy Relaxation Affect Household Financial Asset Allocation? Evidence from the Universal Two-Child Policy in China," Sustainability, MDPI, vol. 16(3), pages 1-23, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yan Zhao & Ehsan Elahi & Zainab Khalid & Xuegang Sun & Fang Sun, 2023. "Environmental, Social and Governance Performance: Analysis of CEO Power and Corporate Risk," Sustainability, MDPI, vol. 15(2), pages 1-18, January.
    2. Katarzyna Kochaniak & Paweł Ulman, 2020. "Risk-Intolerant but Risk-Taking—Towards a Better Understanding of Inconsistent Survey Responses of the Euro Area Households," Sustainability, MDPI, vol. 12(17), pages 1-26, August.
    3. Gang Li & Ehsan Elahi & Xingshuai Wang, 2023. "Population age structure, asset price, and financial stability," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2041-2056, June.
    4. Min Zhu & Haiyun Tang & Ehsan Elahi & Zainab Khalid & Kaili Wang & Nimra Nisar, 2022. "Spatial-Temporal Changes and Influencing Factors of Ecological Protection Levels in the Middle and Lower Reaches of the Yellow River," Sustainability, MDPI, vol. 14(22), pages 1-16, November.
    5. Shengnan Huang & Ehsan Elahi, 2022. "Farmers’ Preferences for Recycling Pesticide Packaging Waste: An Implication of a Discrete Choice Experiment Method," Sustainability, MDPI, vol. 14(21), pages 1-13, October.
    6. Feng Ji & Guangyuan Zhao & Lun Meng & Rana Tehseen & Fushuai Wang, 2022. "Cultivating Talents for Reporting Environmental News on China’s Carbon Neutrality Policy," Sustainability, MDPI, vol. 14(24), pages 1-19, December.
    7. Kaili Wang & Ehsan Elahi & Yuge Zhang & Di Wang & Zainab Khalid, 2022. "A Development of Green Finance and Regional Eco-Efficiency in China," Sustainability, MDPI, vol. 14(22), pages 1-18, November.
    8. Xiuli Cui & Ehsan Elahi & Zainab Khalid & Bo Xu, 2022. "Environmental Regulation, Manufacturing Technological Progress and Pollution Emissions: Empirical Evidence from China," Sustainability, MDPI, vol. 14(23), pages 1-19, December.
    9. Wei Wang & Ehsan Elahi & Shiying Sun & Xiaoqing Tong & Zhaosen Zhang & Mohammad Ilyas Abro, 2023. "Factors Influencing Water Use Efficiency in Agriculture: A Case Study of Shaanxi, China," Sustainability, MDPI, vol. 15(3), pages 1-14, January.
    10. Lirong Xing & Xiaomiao Yin & Chuanxiang Cao & Ehsan Elahi & Taoyuan Wei, 2022. "The Impact of Multidimensional Distance on Agricultural Exports: Evidence from China Based on the Technological Added Value," Sustainability, MDPI, vol. 15(1), pages 1-17, December.
    11. Xiaolong Gao & Changfei Li & Ehsan Elahi & Mohammad Ilyas Abro & Zhaocai Cui, 2023. "Technological Innovation, Product Quality and Upgrading of Manufacturing Value Chain: Empirical Evidence from China," Sustainability, MDPI, vol. 15(9), pages 1-19, April.
    12. Lun Wang & Ehsan Elahi & Yuzhong Zhou & Liming Wang & Shihan Zhang, 2022. "A Review of Packaging Materials’ Consumption Regulation and Pollution Control," Sustainability, MDPI, vol. 14(23), pages 1-16, November.
    13. Xingshuai Wang & Ehsan Elahi & Zainab Khalid, 2022. "Do Green Finance Policies Foster Environmental, Social, and Governance Performance of Corporate?," IJERPH, MDPI, vol. 19(22), pages 1-15, November.
    14. Min Zhu & Mengqi Sun & Ehsan Elahi & Yajie Li & Zainab Khalid, 2023. "Analyzing the Relationship between Green Finance and Agricultural Industrial Upgrading: A Panel Data Study of 31 Provinces in China," Sustainability, MDPI, vol. 15(12), pages 1-19, June.
    15. Min Zhu & Yajie Li & Zainab Khalid & Ehsan Elahi, 2023. "Comprehensive Evaluation and Promotion Strategy of Agricultural Digitalization Level," Sustainability, MDPI, vol. 15(8), pages 1-15, April.
    16. Zhixin Zhang & Xiao Meng & Ehsan Elahi, 2022. "Protection of Cultivated Land Resources and Grain Supply Security in Main Grain-Producing Areas of China," Sustainability, MDPI, vol. 14(5), pages 1-15, February.
    17. Guiso, Luigi & Sodini, Paolo, 2013. "Household Finance: An Emerging Field," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 1397-1532, Elsevier.
    18. Zhixin Zhang & Yingjie Li & Ehsan Elahi & Yameng Wang, 2022. "Comprehensive Evaluation of Agricultural Modernization Levels," Sustainability, MDPI, vol. 14(9), pages 1-17, April.
    19. Xingshuai Wang & Ehsan Elahi & Zainab Khalid & Mohammad Ilyas Abro, 2023. "Environmental Governance Goals of Local Governments and Technological Innovation of Enterprises under Green Performance Assessment," IJERPH, MDPI, vol. 20(3), pages 1-19, January.
    20. Gong, Maogang & Elahi, Ehsan, 2022. "A nexus between farmland rights, and access, demand, and amount of agricultural loan under the socialist system of China," Land Use Policy, Elsevier, vol. 120(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:22:p:15021-:d:971730. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.