EconPapers    
Economics at your fingertips  
 

Cognitive ability and household portfolio diversification: Evidence from China

Kun Wu, Yanhong Li, Xianjun Cai and Junming Yin

Pacific-Basin Finance Journal, 2022, vol. 75, issue C

Abstract: The low level of portfolio diversification is one of the potential high-cost deviations. Based on the data from the 2010 and 2012 China Family Panel Studies(CFPS), this paper empirically analyzes the impact of cognitive ability on the Chinese households portfolio diversification. The results show that cognitive ability has a significant positive effect on the diversification of household portfolio, including the more asset classes, the higher the diversification index of the portfolio, the greater the likelihood of buying a fund, and the higher the proportion of funds of the three assets. After considering the possible endogeneity, the effect of cognitive ability on the diversification of household portfolio is still significantly positive. Using different models, grouping by wealth and level of financial development, the results of this article are robust. We contribute by adding new evidence of diversified portfolio from emerging markets and expanding the scope of cognitive research.

Keywords: Cognitive abilities; Portfolio diversification; Behavioral biases (search for similar items in EconPapers)
JEL-codes: D1 D14 G11 G14 G5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X22001354
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:75:y:2022:i:c:s0927538x22001354

DOI: 10.1016/j.pacfin.2022.101840

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-11-26
Handle: RePEc:eee:pacfin:v:75:y:2022:i:c:s0927538x22001354