Saving: Zhou 2014, the role of siblings

Question 1

Stat showing that Chinese households suffer from underdeveloped financial markets?

Answer 1

2008: >80% of debtors borrowed from family members/relatives

Question 2

How might the one child policy have led to an increase in savings rates 1990-2005?

Answer 2

Less ability to depend on siblings for finance if no siblings

Question 3

2 ways brothers are thought to reduce savings rates?

Answer 3

1) sharing risks+extending borrowing limits

2) sharing cost of supporting parents

Question 4

1/0 vs 2 brothers finding from paper? and another finding?

Answer 4

those with 2+ have lower savings rates

also found number of sisters made no difference to savings rates

Question 5

see figures 4, 5 and 6? What does figure 5 show? and figure 6?

Answer 5

now
5 shows savings rate increases as no. brothers falls
6 shows more brothers->lower savings

Question 6

How do we know the finding of figure 6 wasn’t driven by income considerations?

Answer 6

Income not correlated with number of brothers

Question 7

2 conclusions?

Answer 7

-ve effect of no. of bros on savings

having a bro rather than a sister decreases saving rate by roughly 4.7%

Question 8

4 reasons brothers may decrease the savings rate?

Answer 8

1) income uncertainty/health risk
2) regional financial development
3) supporting parents
4) different income/asset groups

Question 9

What are the results regarding why income uncertainty/health risk is relevant to brothers decreasing the saving rate?

Answer 9

Measured risk using peoples answers to Qs on wage stability and health status. Findings were that households with a larger income risk had a larger brothers effect

Question 10

What are the results regarding why regional financial development is relevant to brothers decreasing the saving rate?

Answer 10

Brothers effect found to be smaller in region with better financial system development (ie. higher insurance density/more foreign banks)

Question 11

What are the results regarding why supporting parents is relevant to brothers decreasing the saving rate?

Answer 11

Parents in China mainly supported by their sons

Tf findings were that the higher the number of deceased parents, the smaller the size of the brothers effect

Question 12

What are the results regarding why different income/asset groups is relevant to brothers decreasing the saving rate?

Answer 12

Data shows brothers effect is mainly driven by low income/assets groups
This confirms the idea of risk sharing/inc. borrowing limits effects of brothers

Question 13

2 conclusions of the effects of brothers?

Answer 13

1) Having an additional brother decreased an individual’s household saving rate by at least 5%, due to them helping with sharing risks, lending money and sharing the cost of parents
2) The decline in the avg. number of brothers in recent years explains 38% of the increase in aggregate savings in urban China

Question 14

1 solution of this area?

Answer 14

As number of brothers declines, urgent need to develop household financial markets!