Periods of market crisis are often accompanied by heightened fear and information overload, which can induce information avoidance behaviors such as the ostrich effect. While prior research has documented investors’ tendency to avoid unfavorable information, little is known about how different information sources—and trust in those sources—jointly shape such behavior under extreme uncertainty. Drawing on Granular Interaction Thinking Theory (GITT) and employing Bayesian Mindsponge Framework (BMF) analytics, this study examines how investors’ regular securities-related information sources is associated with the ostrich effect during the 2022 market downturn in China, and how these associations are conditioned by trust. Using survey data from 1,451 Chinese individual stock investors, we model investors’ recalled frequency of temporarily disengaging from stock investing as an indicator of information avoidance. The results show that regularly consulting professional sources, financial newspapers, and online forums is associated with information avoidance, whereas reliance on personal relationships and company disclosures is not. Importantly, trust moderates these relationships in distinct ways. Higher trust in professional sources is associated with reduced information avoidance, while higher trust in financial newspapers and online forums amplifies avoidance behavior. Among all sources, the interaction between trust and information referral is strongest for financial newspapers. These findings suggest that trust does not uniformly mitigate fear-driven avoidance. Instead, when combined with high-entropy information sources, trust can exacerbate cognitive and emotional strain, increasing investors’ propensity to disengage. By highlighting the joint roles of informational entropy and trust, this study advances behavioral finance research and offers practical insights for investors, policymakers, and regulators seeking to improve decision-making resilience during periods of market crisis.

This paper examines why tax incentives fail to stimulate participation in China's third-pillar commercial pension insurance, emphasizing the role of rational inattention. Using household survey data from China Family Panel Studies (CFPS) spanning 2014-2022 and a difference-in-differences-in-differences (DDD) design, we find that pilot policy generated a statistically insignificant average effect on participation, with rational inattention - proxied by financial literacy - explaining much of its ineffectiveness. We develop a dynamic consumption-portfolio model featuring costly information acquisition, and then resolve limitations of standard models through a dynamic framework with distinct savings channels and policy-focused rational inattention. The models show that rational inattention distorts perceptions of tax benefits and wage growth, raising participation costs, while multiple savings channels dilute incentives. Only households with higher financial literacy substantially respond to the policy. Our results reveal how cognitive frictions undermine pension reform and offer implications for designing behaviorally-informed retirement schemes.

This study explores how the application of democratic rule in land reform decision-making determines villagers’ political trust towards different levels of the government in China. Based on analyses of a two-period household survey data we find that in China’s most recent Collective Forest Tenure Reform, the use of democratic rule improves villagers’ trust for town and county cadres, whereas the impact on trust towards village cadres is only significant for the democracy involving all the villagers or households in a village. This pattern of trust is partly explained by our findings that the democratic process helped decrease the unresolved inter-village forestland disputes whilst there seems no such impact on the within-village land disputes. Heterogeneity analyses show that democratic decision-making has a more pronounced effect in improving trust for villagers with lower income, and those without affiliation with the Chinese Communist Party (CCP) or to the village committee.

This paper examines the influence of gambling culture on household investment decisions concerning risky financial assets. To estimate these effects, the study utilizes data from the 2019 China Household Finance Survey. The empirical findings reveal that gambling culture significantly enhances household preferences for risky financial assets and raises the proportion of household allocations to these assets. Furthermore, both subjective financial literacy and objective financial literacy amplify these positive effects. The heterogeneity analysis revealed that the effects of gambling culture on household preference for and allocation of risky financial assets varied across regions, income levels, and household types.

The aging population is intensifying, and solving the problem of elderly care is urgent. This article is based on CHFS (2019) survey data, and empirical research has found that commercial pension insurance significantly promotes households' allocation of risky financial assets. The mechanism is tested using household risk perception and investment risk preference as mediating variables. In addition, through heterogeneity testing, it was found that the positive effect of commercial pension insurance on the allocation of risky financial assets is more significant in rural households with household registration, two sets of housing, and households in the northeast.

The aging population is expanding globally, and addressing the challenges of elderly care is urgent. Using the 2019 China Household Finance Survey data, this study finds that commercial pension insurance significantly promotes households’ allocation of risky financial assets. We test the mechanisms using household risk perception and investment risk preference as mediating variables. Heterogeneity analysis reveals that the positive effect of commercial pension insurance on risky financial asset allocation is more significant in rural households with household registration, those with two sets of housing, and households in the northeast. The research findings of this article aim to promote the continuous improvement of China’s elderly care system and provide important empirical evidence for the formulation of relevant policies.

Despite nearly twenty years of privatization, mixed-ownership reform has been the mainstay of SOE reform in China in recent years. This raises the question of whether the financial performance of mixed-ownership firms (Mixed firms) is better than private-owned enterprises (POEs). Although Mixed firms suffer more from government intervention, unclear property rights, and interest conflicts between state shareholders and private shareholders, they can also benefit from the external resources controlled by the state. Therefore, the performance of Mixed firms is still unclear. Collecting data from the Chinese A-share listed market, we divide the firms into POEs, Mixed firms controlled by the state (MixedSOEs), and Mixed firms controlled by the private sectors (MixedPOEs). Measuring profitability using ROA and ROE, we find that on average, POEs perform better than Mixed firms, and MixedPOEs have a higher profitability than MixedSOEs. Within Mixed firms, more state shares are related to lower profitability, and more private shares are related to higher profitability. Using the NBS survey data, we further find that on average, SOEs exhibit the lowest profitability, with MixedSOEs and MixedPOEs in the middle, and POEs have the highest profitability. We try to address the endogeneity challenge in several ways and get similar results. Overall, our analysis provides new evidence on the financial performance of mixed-ownership firms.

Portfolio underdiversification is one of the most costly losses accumulated over a household’s life cycle. We provide new evidence on the impact of financial inclusion services on households’ portfolio choice and investment efficiency using 2015, 2017, and 2019 survey data for Chinese households. We hypothesize that higher financial inclusion penetration encourages households to participate in the financial market, leading to better portfolio diversification and investment efficiency. The results of the baseline model are consistent with our proposed hypothesis that higher accessibility to financial inclusion encourages households to invest in risky assets and increases investment efficiency. We further estimate a dynamic double machine learning model to quantitatively investigate the non-linear causal effects and track the dynamic change of those effects over time. We observe that the marginal effect increases over time, and those effects are more pronounced among low-asset, less-educated households and those located in non-rural areas, except for investment efficiency for high-asset households.

We study the effects of mortgage debt and informal home loans on stock ownership. Mortgage debt is typically originated with licensed financial institutions while informal home loans are obtained from private lending. Using the China Household Finance Survey data, we show that mortgage debt has a positive relationship, while informal home loans have a negative relationship, with a household’s likelihood and degree of subsequent stock market participation. Instrumental variable estimates identify a causal impact of these effects. Further tests demonstrate cross-sectional variations of these effects across urban development, education, financial literacy, loan interest rate, maturity, and funding sources.

This paper provides evidence on the cost of political interference on banks with Chinese Private Enterprise Survey data between 2002 and 2012. Using regional political turnovers as a proxy for political influence, we show that political motivations for future promotions distort the bank lending decisions and crowd out lending to private firms. Besides, firms with business connections are more sensitive to turnover, while political connections are not significantly affected. These lending distortions are more considerable where competition for future promotion is more intense and where incumbents have more influence over banks. Moreover, the effect is especially pronounced for small firms. As a result of reduced bank credit, firms’ total credit availability decreases and they have to cut investments. Overall, our results suggest that preferential lending to politically important sectors has negative spillovers and can lead to costly crowding-out of private sectors.