The Relationship between Credit Constraints and Household Risky Assets : The Case of China

The purpose of this empirical research is to evaluate the relationship between credit constraints and household risky assets in China. The life-cycle hypothesis theory and household portfolio choice theory is the basis of the research. Using a probit model, we find out that credit constraints do not have a clear impact on the probability of households to hold risky assets. Furthermore, the coefficients between age and risky assets are non-linear. Households in urban regions have a high positive coefficient with risky assets. As for now, the literature is missing theories on the relationship between credit constraints and household financial risky assets in China. Thus, this study will enrich the literature of household financial assets allocation by using a questionnaire survey from CHFS (China Household Finance Survey)