A0342
Title: Learning from neighbors: Peer effects in Chinese household financial investments
Authors: Juncong Guo - Shanghai Jiao Tong University (China) [presenting]
Xi Qu - Shanghai Jiaotong University (China)
Abstract: Nationally representative survey data from China is employed to examine peer effects on the investment behaviors of Chinese households with respect to wealth management products. The empirical findings indicate that neighbors' behaviors have a statistically significant impact on investments in these financial products. These peer effects exist at both the extensive and intensive margins, even under incomplete information. Heterogeneity analyses suggest that the underlying mechanism driving these effects is the spread and learning of information. Additionally, it is observed that the rise in the participation rate in wealth management product investments is linked to a reduction in inequality. Accordingly, the findings propose that policymakers could leverage peer effects from influencers to promote household investments, thereby contributing to the mitigation of inequality.
