Income Inequality and Household Financial Risk-Taking: Policy Implications for China’s Financial Sector

Household participation in the hazardous financial market and the distribution of financial assets are significantly influenced by age, health, family size, property ownership, and family income. This study investigates families’ financial asset allocation behavior by constructing Probit and Tobit models and conducting a demonstration analysis using Stata software. Various factors, including age, health status, family size, property ownership, and family income, influence a family’s financial asset allocation behavior. The data is obtained from the household finance survey conducted in China between 2000 and 2023. These results theoretically support the government’s efforts to advance expansionary fiscal policy. It can serve as a roadmap for financial institutions to resolve challenges related to oligomerization and an aging population, as well as attract new customers and boost revenues. The nation’s significant disparity between prosperity and poverty, inadequate family income, and burden of family support are also highlighted. Declining fertility rates and an aging population have the potential to alleviate the financial burden and stimulate national and social development. It has the potential to enhance the growth and development of both nations and society. Population aging affects the allocation of financial resources among private families, generating several notable deductions. The discussion also includes metrics that establish relevant standards for governments, financial institutions, and private consumers. Governments implement legislative measures to alleviate the financial burden resulting from an aging and shrinking population.