The Impact of Medical Insurance on Household Stock Market Participation: Evidence From China Household Finance Survey

Abstract

This paper explores the impact of medical insurance on the possibility of household participation in the stock market and the portfolio share of equity, applying Probit, and Tobit models with the data from China Household Finance Survey (CHFS). The empirical results highlight that participating in medical insurance can significantly increase the possibility of households participating in the stock market and the portfolio share of equity, and have passed the robustness tests, including propensity score matching (PSM), altering estimation methods, replacing explained variables, and eliminating samples. Besides, heterogeneity analysis shows that the impact of medical insurance on household stock market participation is more significant in eastern region, urban areas, and households with higher income level. Further mechanism analysis implies that household participation in medical insurance mainly affects their stock market participation through preventive savings effect. It is necessary to improve the medical insurance system and encourage household participation in stock market so as to further promote financial development in China.

Can China's New Rural Cooperative Medical System Improve Farmers' Subjective Well-Being?

“…In 2020, urban residents' per capita disposable income in China was 43,834 yuan, while rural residents' per capita disposable income was 17,131 yuan, with an income ratio of about 2.56:1 between urban and rural residents. 1 Low income directly affects subjective well-being, but more importantly, it isn't easy to obtain all necessary goods and services in life, further reducing farmers' subjective well-being. For Chinese farmers, health care is almost the service that most affects their quality of life and wellbeing.…”

“…Since the dependent variable "SWB" is a binary variable, the probit model is chosen to estimate the effect of farmers' participation in the NRCMS on their subjective well-being. The model form is shown in equation (1). where SWB i is a measure of an individual's subjective well-being, Medical_if i is a measure of whether the individual participates in NRCMS or not.…”

“…The endogeneity problem caused by the two-way causality and omitted variable problem can lead to systematic bias in the probit estimation, so this paper will add a model based on model (1).…”

“…At the same time, the coverage of the NRCMS and the scope of reimbursement for related diseases are also gradually expanding. As the most important medical insurance system in rural China, the NRCMS has improved not only farmers' investment, health and quality of life, but also enhanced the utilization of medical services in rural areas (1)(2)(3)(4).…”

Factors Influencing Stock Market Participation: A Review

“…2. Shi et al, (2021) [32] : This study examines the effects of medical coverage on households ' propensity to take part in the stock market and the share price of their portfolio using data from the Chinese Household Finance Survey and the Probit and Tobit models (CHFS). The empirical results demonstrate that having health coverage significantly increases a household's possibility of stock investing and portfolio equity ownership.…”