Risk-sharing networks, consumption, and asset allocation: Micro-evidence from China

Ying Fan, Yidi Wang and Zan Yang

Emerging Markets Review, 2025, vol. 66, issue C

Abstract: Kinship networks play an important role in sharing risk under insufficient social security. We examine the heterogeneous risk-sharing networks and their impacts on household finance. Based on a staggered DID design, we find that households under negative shocks obtain a larger extent of social capital from extended family members with blood ties and geo-proximities, similar income positions, and lower uncertainty exposures. The vehicles of risk-sharing differ across networks, and direct monetary transfers over quasi-credits are facilitated by altruism and social norms. However, over-reliance on risk-sharing networks reduces willingness to engage in life-cycle financial planning and dampens long-term financial performance.

Keywords: Risk-sharing networks; Consumption; Asset allocation; Financial planning; China (search for similar items in EconPapers)
JEL-codes: D81 G51 R21 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:66:y:2025:i:c:s156601412500038x

DOI: 10.1016/j.ememar.2025.101289

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