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The Dual Effects of Housing on Portfolio Choices: Evidence from Urban China

Jianmei Zhao () and Jiandong Li ()
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Jianmei Zhao: China Academy of Public Finance and Public Policy, Central University of Finance and Economics
Jiandong Li: Chinese Academy of Finance and Development, Central University of Finance and Economics

Annals of Economics and Finance, 2017, vol. 18, issue 2, 253-276

Abstract: Finance literature regarding the role of housing on portfolio choices is controversial. Our study reconciles both positive and negative effects of housing on portfolio decisions in the context of China. Employing the China Household Finance Survey (CHFS) data, we find dual effects of housing on portfolio choices simultaneously. House value appreciation imposes positive effects on households' stock investment, whereas house-to-wealth ratio has adverse effects on households' investment on risky financial assets. Housing itself creates trade-off effects on households' portfolio choices.

Keywords: Housing; Portfolio choice; Dual effects; Chinese housing reform (search for similar items in EconPapers)
JEL-codes: D91 E21 G11 R20 R22 (search for similar items in EconPapers)
Date: 2017
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