Digital Economy, Asset Allocation Efficiency and Household Property Income ——Evidence from China Household Finance Survey
ZHOU Li, WU Yu, YI Xingjian
School of Finance, Guangdong University of Foreign Studies; College of Finance, Nanjing Agricultural University; School of Finance & Investment, Guangdong University of Finance
Summary:
Under the impact of a new wave of industrial transformation and technological revolution, the value of data is rapidly accelerating, and digital technology is integrated with the real economy, promoting the development of the digital economy. Meanwhile, household asset allocation efficiency affects property income, wealth accumulation, and social wealth distribution, which in turn impacts household welfare. Therefore, exploring how the development of the digital economy enhances household asset allocation efficiency and promotes property income is of significant practical importance. Taking advantage of the unique attributes of the digital economy, this study measures the digital economy index for 262 prefecture-level cities in 2012, 2014, 2016, and 2018, and matches household micro-survey data with city-level data to explore the relationship and mechanism between digital economy development, household asset allocation efficiency, and property income using econometric models. The results show that digital economy development significantly increases property income by improving household asset allocation efficiency. Specifically, the main channels include enhancing financial accessibility, facilitating information access, and alleviating liquidity constraints. Meanwhile, the impact of digital economy development on property income exhibits obvious asymmetric effects. These findings still hold up after robustness tests such as replacing the core explanatory variables, conducting instrumental variable regression, and selecting the “Broadband China” strategy as a quasi-natural experiment. The contributions of this paper are as follows: First, while existing literature on the digital economy often focuses on macro-level impacts such as high-quality development, total factor productivity, and economic growth (Zhao et al., 2020; Liu & Ma, 2020; Qian et al., 2020), few studies explore the relationship between digital economy development and household property income from a macro-micro perspective. This paper offers a more detailed analysis by examining the effects of digital economy development on household property income from city and household levels. Second, this study provides an examination of the channels through which the digital economy influences household property income by evaluating its impact on household asset allocation efficiency. It identifies that increased financial accessibility, improved information availability, and reduced liquidity constraints are the underlying mechanisms through which digital economy development enhances asset allocation efficiency, thereby extending and deepening existing literature. Third, by employing the “Broadband China” strategy as a quasi-natural experiment, this paper addresses endogeneity issues and improves the causal identification between digital economy development and household property income, thereby enhancing the robustness of the above findings. The conclusions of this study have several policy implications. First, given that the digital economy can enhance household asset allocation efficiency and thereby boost property income, policymakers should advance financial technology innovations and improve financial products and services, particularly for low-and-middle-income households, to reduce wealth inequality and achieve common prosperity. Additionally, there should be more investment in internet infrastructure and Digital China technology to maximize household welfare. Second, the promotion effect of the development of the digital economy on the efficiency of asset allocation in rural areas and low-income households needs to be deepened, which requires relevant departments to implement a precise, dynamic, and differentiated digital technology strategy. Third, the government departments should also address how to improve household human capital, so that households can better share the benefits of the digital economy. Finally, the asymmetric effects of the digital economy on asset allocation efficiency indicate that financial institutions should consider individual risk preferences. When providing additional credit support to households with a certain amount of debt, it is necessary to strengthen the screening of investors to ensure the optimal allocation of society credit resources.
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