Holding risky financial assets and subjective wellbeing: Empirical evidence from China

Subjective wellbeing is designed to consider positive experiences and to be descriptive of an overall assessment rather than focusing on specific experiences or aspects of an individual's life. The purpose of this study is to investigate the relationships between the holding of risky financial assets and subjective wellbeing. Participation in financial markets with different risk levels of assets is divided into holding risk-free assets and holding risky assets. Holding risk-free assets is measured according to two sets of variables: having a demand deposit and having certificates of deposit. Moreover, the holding of risky financial assets is also measured by two sets of variables: holding stocks and holding mutual funds. Using data from the 2011 and 2013 China Household Finance Survey (CHFS), the results indicate that the impact of holding risk-free assets in the financial market on subjective wellbeing is positive, while holding risky assets is found to contribute negatively to subjective wellbeing. The results imply that to improve subjective wellbeing, financial policy-makers and investment institutions should develop effective policies and financial products to improve the efficiency of financial markets, and thereby provide more low-risk financial assets.