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Risk sharing, siblings, and household equity investment: evidence from urban China

Author

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  • Xiaoyu Wu

    (Central University of Finance and Economics)

  • Jianmei Zhao

    (Central University of Finance and Economics)

Abstract

In a society where financial market and insurance market are under-developed, social networks play an important role in risk sharing. Using data from the 2011 China Household Finance Survey, this paper examines the effect of siblings, which form strong ties in a social network, on household equity investment. We find that having one more sibling increases the probability of participation in stock market by 15–17% points and increases the fraction of total assets in stock investment by 2–3% points. We also find that sisters have a larger effect on equity investment than brothers. With the examination of the effects of siblings on social interaction, risk tolerance, saving, and borrowing behaviors, we argue that the main channel through which siblings affect household investment is risk sharing.

Suggested Citation

  • Xiaoyu Wu & Jianmei Zhao, 2020. "Risk sharing, siblings, and household equity investment: evidence from urban China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(2), pages 461-482, April.
    • Handle: RePEc:spr:jopoec:v:33:y:2020:i:2:d:10.1007_s00148-019-00740-x
    DOI: 10.1007/s00148-019-00740-x
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    3. Feng, Chen & Bai, Caiquan & Kang, Yankun, 2023. "Historical social capital and contemporary private investment choices," Journal of Corporate Finance, Elsevier, vol. 79(C).
    4. Xu, Ziyao & Ma, Junfeng & Li, Donghui & Fu, Wentao, 2022. "Religious beliefs and stock market participation: Evidence from urban households in China," Research in International Business and Finance, Elsevier, vol. 63(C).
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    More about this item

    Keywords

    Household equity investment; Risk sharing; One-child policy; Social network; China;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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