Search

The Impact of Digital Literacy on Financial Risk Asset Allocation in Chinese Households

Author(s)

Jing Yang, Yaru Liu, Qianyu Shen

Affiliation(s)

College of Finance, Jiangxi Normal University, Nanchang, China

Abstract

Enhancing digital literacy has become a key national strategy of development in the era of digital economy and serves as a new engine for boosting residents’ property income and achieving shared prosperity. This paper investigate how digital literacy affects household participation in financial markets and depth of household risk asset investments using data from China Family Panel Studies (CFPS) in 2016, 2018, and 2020. The findings reveal that digital literacy influences the household asset allocation toward financial risk. The study also shows that the effect of digital literacy on financial risk market participation decreases across high, middle, and low-asset households, while its depth of influence on the asset investment toward financial risk increases. Additionally, the impact of digital literacy on financial market participation decreases across households in the eastern, central, and western regions, with a similar trend observed in the asset investment toward financial risk across central, western, and eastern households.

Keywords

Digital literacy; Financial Risk Asset; Financial Risk Market Participation; Depth of Household Risk Asset Investments

References

[1]Chen, H. Design of school-based curriculum "Digital Literacy Understanding Education". Education Science Forum, 2016, (10), 57-60. [2]Unesco. Digital literacy in education, 2021. [3]Wu, S. X. and Qi, T. X. Liquidity, life cycle and portfolio heterogeneity: An empirical analysis of a survey of Chinese investor behavior. Economic Research, 2007, (2): 97-110. [4]Brown, J. R., Ivković, Z., Smith, P. A., et al. Neighbors Matter: Causal Community Effects and Stock Market Participation. The Journal of Finance, 2008, 63 (3). [5]Ulker, A. Wealth Holdings and Portfolio Allocation of the Elderly: The Role of Marital History. Journal of Family and Economic Issues, 2009, 30 (1). [6]Zhu, T., Xie, T. T. and Lu, J. Elderly people and real estate: a study of elderly family asset allocation in Chinese cultural context. Modern Finance and Economics (Journal of Tianjin University of Finance and Economics), 2014, 34 (8): 14-25. [7]Yin, C. C., Wu, Y. and Gan, L. Financial availability, financial market participation and household asset choice. Economic Research, 2015, 50 (3): 87-99. [8]Wang, C., Yao, L. and Chai, S. J. The impact of age structure on household asset allocation and its regional differences. Research in International Finance, 2017 (2): 76-86. [9]Zhang, H. T. and Wang, E. P. Current status and development trend of attitude-behavior relationship research. Advances in Psychological Science, 2007, (1): 163-168. [10]Lin, B. and Wu, S. Study on the correlation between policy changes and households' willingness to allocate financial assets - an empirical analysis based on SVAR. Accounting and Economic Research, 2019, 33 (4): 92-109. [11]Gan, X. L., Yuan, S. J. and Wu, J. A study on the impact of financial environment on households' financial asset choices - micro-measurement horizon evidence from the China Household Finance Survey. Accounting and Economic Research, 2019, 33 (2): 83-100. [12]Tsai, H. J. and Wu, Y. Optimal portfolio choice for investors with industry-specific labor income risks. Finance Research Letters, 2014, 11 (4). [13]Li, X., Wu, Y. and Li, J. Digital financial development and household commercial insurance participation. Statistical Research, 2021, 38 (5): 29-41. [14]Yi, X. J. and Zhou, L. Does the development of digital inclusive finance significantly affect residential consumption - micro evidence from Chinese households. Financial Studies, 2018, (11): 47-67. [15]Zhou, G. and Liang, Q. Internet use, market frictions and household investment in risky financial assets. Financial Studies, 2018, (1): 84-101. [16]Weng C., Zhu H. G. and Chen J. Digital Literacy and Digital Financial Usage Behavior of Rural Migrant Population--Based on Survey Data of Rural Migrant Population in 5 Cities of Jiangsu Province. Wuhan Finance, 2022 (6): 31-41. [17]Wang, X. H., Liu, Y. and Song, M. Digital competence and household risky financial asset allocation. China Rural Economy, 2023, (11): 102-121. [18]Zhang, X., Wan, G., Zhang, J., et al. Digital economy, financial inclusion and inclusive growth. Economic Research, 2019, 54 (8): 71-86.