How Do Climate Factors Affect Household Portfolio Choices? Empirical Evidence from China's Household Survey

This paper empirically investigates the impacts of climate factors, including temperature and precipitation, on household portfolio choices based on the panel data of 2,110 households continuously observed from the China Family Panel Studies (CFPS) for 2010, 2012, 2014 and 2016. The results show that climate factors significantly affect household portfolio choices mainly through channels including income, asset prices, health and risk attitudes. Furthermore, the results also show that climate factors moderate the effects of income, asset prices and investors’ confidence on household portfolio choices. This research contributes to the literature by introducing theories regarding behavioral finance and climate economics into the research on household portfolio choices, which provides insights into the impact mechanisms of climate factors on household behaviors and enriches the studies of behavioral investment decision making and environmental economics