Natural disaster experiences, resilience resources, and household risky financial market participation: Evidence from China

Jiankun Liu and Chante Jian Ding

Research in International Business and Finance, 2025, vol. 77, issue PB

Abstract: Natural disasters have been demonstrated to cause devastating effects on household livelihood, but little is known about the impact of natural disasters on households’ financial behaviors. Using data from the China Household Finance Survey spanning 2019–2021, this study examined the relationship between natural disaster experiences and household risky financial market participation and investigated the role of resilience resources in moderating the potential adverse impact of natural disasters. The findings demonstrated that natural disaster experiences reduced household risky financial market participation rates as well as risky asset allocation in their financial portfolios. This decline was caused by an income decrease, a shift in risk attitudes toward risk aversion, and an increase in psychological stress. Furthermore, the negative impact of natural disaster experiences on risky financial market participation would be mitigated by individual- and household-level resilience resources, i.e., financial literacy and socio-economic status. Our study explained the limited participation puzzle in the risky financial market in China from the perspective of natural disaster risks and highlighted the significance of the improvement in affected households’ finance behaviors by narrowing gaps in resilience resources between households.

Keywords: Natural disaster experiences; Risky financial market participation; Resilience resources; China (search for similar items in EconPapers)
JEL-codes: G11 G12 G41 G51 G53 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:77:y:2025:i:pb:s0275531925001989

DOI: 10.1016/j.ribaf.2025.102942

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