Population age structure, asset price, and financial stability

Abstract

Based on the data collected from 32 countries, the empirical test is conducted by constructing the financial stability index FSCI (Financial Stability Conditions Index). Results found that the changes in population age structure will affect financial stability, but the effects of different age structures are inconsistent, and there is country heterogeneity. The laborers are the main force in financial markets and significantly contribute to financial stability. The elderly population is also conducive to long‐term financial stability due to their low‐risk attitude. Results also confirmed that a change in population age structure affects household asset allocation prices.