Family trust and intertemporal decision making : evidence from the CFPS surveys = 家庭信任與跨期決策 : 基於CFPS調查的研究

Abstract

 With the continuous promotion of inclusive financial policy in China, the rapid development of financial market and financial innovation make financial products increasingly diversified and complicated. A variety of financial products and institutions began to cover more people and regions. People can have multiple investment choices. However, as the demand side of households and individuals, the utilization rate of financial products and participation in the financial market still need to be improved. Trust is essential to the functioning of society. The improvement of social trust is beneficial to economic development and transaction. The core of investment is an exchange of value across time and space. Since it is the value exchange between participants, mutual trust is the premise of financial transactions, and the deepening of trust could facilitate the development of financial activities. This paper is based on trust theory, family finance theory, life cycle theory and portfolio theory. Theoretical analysis shows that the family's trust in other members of society will affect the family's intertemporal decision-making, and thus affect the family's investment behavior. On the basis of theoretical analysis, this paper firstly conducts a case study on one family from the dataset of China Family Panel Studies (CFPS) and Mr. Liu's family, and preliminarily proves that a high degree of family trust is conducive to improving the intertemporal decision of family finance. Then in the empirical research part, based on the data of China Family Panel Studies (CFPS), this paper proves that there is a causal relationship between family trust and family intertemporal decision-making behavior. In addition, differences in individual characteristics can lead to different perceptions of the same thing. In order to explore whether family demographic factors may directly or indirectly affect intertemporal family financial decisions, this paper designed the moderating effect models of gender, age and education of the family members who know most about family finance as moderating variables. Furthermore, other important variables may be omitted in this paper, resulting in omission variable bias, and there may also be reverse causality. Therefore, instrumental variable method is adopted in Chapter 10 to alleviate the endogeneity problem. It is found that the increase of household trust will significantly increase the investment in household financial products, formal institutional creditor's rights and commercial insurance, but has no significant impact on the informal private lending investment. Moreover, the empirical study of the moderating effect shows that: when the person who knows most about family finance is female, the positive relationship between family trust and commercial insurance investment is stronger, and the positive influence on the relationship between family trust and financial product investment is partially significant, and there is no significant effect on the relationship between family trust and financial product investment. The age of the person who knows most about family finance will weaken the positive correlation between family trust and financial product investment. Age will partially weaken the positive correlation between family trust and debt investment, but has no significant effect on the positive correlation between family trust and commercial insurance investment. Education level of those who know most about family finance will weaken the positive correlation between family trust and commercial insurance investment. Education level will partially weaken the positive correlation between family trust and debt investment, but has no significant effect on the relationship between family trust and financial product investment. On the basis of literature, theoretical analysis and case study, this paper proposes the mechanism of trust influencing family financial behavior from the perspective of family intertemporal decision-making through empirical analysis. Trust can change family intertemporal decision-making and then change family financial behavior. To some extent, we found that gender, age and education of the person who knows most about family finance as moderating variables affect the moderating mechanism of the relationship between family trust and family intertemporal decision making. Using the method of instrumental variables as the identification strategy, the average trust degree of the family community as the instrumental variable of the family trust degree, the relatively robust results are obtained. Therefore, this paper has certain reference significance.