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Financial Literacy, Trading Experience and Household Portfolio Choice
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TitleFinancial Literacy, Trading Experience and Household Portfolio Choice  
AuthorYin Zhichao,Song Quanyun and Wu Yu  
OrganizationSouthwestern University of Finance and Economics;; 
Key WordsFinancial Literacy; Trading Experience; Financial Market Participation; Household Portfolio Choice 
AbstractBased on China Household Finance Survey(CHFS) data, the paper investigates the effect of financial literacy and trading experience on households’ financial market participation and financial portfolio choices. The paper finds that financial literacy affects financial decision-making significantly: households with high literacy are more likely to participate in the financial (or stock) market and increase their risky asset holdings. Trading experience, measured by the year of stock trading or the year of fund trading, significantly increase households’ risky asset holdings and help to improve houesholds’ probabilty of earning profit. Furthermore, we find that the improvement of economic and finacial environment, the increase of households’ net-asset and income, risk prefer and higher education have positive effect on households’ financial market participation and their risk asset holdings, while both self-employed enterprises and pruchasing owner-occupied housing will squeeze out them. Households in the rural area have lower probability of paticipating in the financial market and less risky asset holding in their portfolio. 
Serial NumberWP520 
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