HOW DIGITAL FINANCE DRIVES THE PERFORMANCE OF FINANCIAL ASSET ALLOCATION IN CHINESE URBAN HOUSEHOLDS

Abstract

Rising Chinese household wealth has increased the demand for financial asset allocation. Digital finance has transformed traditional financial services, broadening participation in financial asset allocation to a wider spectrum of households through digital channels. However, the core objective of asset allocation is to enhance households’ overall financial well-being. This study analyses the influence of digital finance drivers on the performance of financial asset allocation (PFAA) in urban Chinese households. The sample framework was designed using a multistage stratified random sampling method, in which the sampling probability was proportional to the stratum’s size, ensuring randomness and independence. Field surveys were conducted in 19 first-tier Chinese cities, yielding 518 valid samples. Regarding data analysis techniques, this study initially employed exploratory factor analysis (EFA) to explore pertinent factors, followed by confirmatory factor analysis (CFA) to validate the measurement model. Subsequently, a structural equation model (SEM) was employed to estimate the path relationships and evaluate the research hypotheses. The study’s outcomes revealed that all three independent variables–digital finance access, usage, and quality–positively influence PFAA. However, the relationship between the quality of digital finance and PFAA is relatively weak. These findings underscore the substantial value of digital finance for augmenting financial welfare and highlight the need for the government to refine policies associated with digital financial services. Financial institutions are encouraged to enhance the quality of their products and services, whereas households should bolster their financial literacy. Collectively, these efforts contribute to advancing family financial welfare, a critical aspect of economic prosperity.

Keywords: Digital Finance, Performance of Financial Asset Allocation, Chinese Households