How does climate policy uncertainty affect household financial asset allocation? Evidence from China

As global climate change intensifies, climate policy uncertainty (CPU) has emerged as an increasingly important factor shaping economic and financial decisions. Using data from the China Household Finance Survey (CHFS) matched with a China-specific CPU index constructed from coverage in six major newspapers, this paper examines the impact of CPU on household financial asset allocation and the underlying transmission mechanisms. The results show that CPU significantly increases both household participation in risky financial markets and the share of risky financial assets in household portfolios, suggesting that households actively adjust their portfolio choices in response to CPU. The positive effect is more pronounced among urban households, households headed by more educated individuals, and male-headed households. Further analysis reveals that economic attention and social pension insurance participation strengthen the positive impact of CPU through the risk-attitude channel. These findings provide new micro-level evidence on the economic consequences of CPU and highlight the importance of information acquisition and institutional protection in shaping household financial behavior under CPU.