Understanding asset holdings of Vietnamese households

This paper examines household management in terms of saving and spending of financial and real (primarily gold and jewelry) asset holdings among Vietnamese households and the extent to which these are used when a major health shock or a family event-expenditure shock occurs. Using 2002–06 Vietnam Household Living Standard Surveys (VHLSS) pooled data, this study demonstrates that the range of assets households rely upon for precautionary saving is broader than those described in standard household saving portfolio literature. We find the enduring presence of non-conventional assets such as gold and other precious metals in many households, although this significantly declined during the reference period. We also found significant negative correlation between education level and household’s decision to own gold. On the other hand, the positive and significant correlation between the sale of gold and the incidence of having a hospitalized family member or a funeral suggests that Vietnamese households tend to rely on these assets as precautionary saving. This illustrates their valuable function beyond the more commonly known cultural purpose i.e. inheritance bequests, dowries and offerings. The study provides important insights for savings mobilization such as financial literacy education and reducing expenditure shocks by improving health insurance system.