Beschreibung:
This paper examines the impact of unexpected external shocks on households' investments in risky assets. We construct a balanced panel using data from four waves of the China Household Finance Survey (CHFS) 2013–2019 and employ a synthetic control DID approach (SDID) to examine the effects of two completely opposite shocks—disasters (both natural and human-made) and unexpected wealth—on investments in risky assets such as stocks. The analysis shows that unexpected disasters and windfalls have significant effects on household investments in stocks; however, surprisingly, the effects of disaster shocks on stock investments are positively correlated rather than intuitively negative. After eliminating and testing several possible impact pathways, we obtain a plausible explanation for this puzzling finding