The Impacts of Digital Inclusive Finance on China’s Household Financial Asset Selection

Abstract

Reasonable choice of financial assets is the basis of family wealth accumulation, and Chinese families generally have the problem of "limited participation" in financial markets in terms of financial asset choice. Against the background of the deep integration of digital technology and the financial industry, how to optimize household financial asset choice with digital inclusive finance as a grip is an issue of widespread concern for the government and academia. Based on the 2019 China Household Finance Survey data and Digital Inclusive Finance Index data from Peking University, this paper constructs Probit and Tobit models to examine the impact of the development of digital inclusive finance on household financial asset choice in terms of both financial market participation rate and participation depth respectively. The findings are as follows: digital inclusive finance significantly promotes household participation in financial markets and increases the proportion of risky financial assets, and the impact is more significant in urban areas, eastern regions and young households; this conclusion still holds after controlling for the endogeneity problem using the spherical distance from each provincial capital to Hangzhou as an instrumental variable.