 Financial literacy and retail investors' financial welfare: Evidence from mutual fund investment outcomes in ChinaJinglin Jiang, Li Liao, Zhengwei Wang and Hongyu Xiang Pacific-Basin Finance Journal, 2020, vol. 59, issue C Abstract: This paper examines the financial literacy of mutual fund retail investors and its relationship with their investment outcomes. Using a unique dataset on Chinese mutual fund retail investors containing a survey on financial literacy, we find that women display significantly lower financial literacy than men. Investors with a higher level of education and richer investment experience have higher financial literacy. A one-standard-deviation increase in advanced financial literacy is associated with a probability decrease of an individual investor suffering a major loss by 1.940 percentage points, >13% of the sample average. Highly literate investors also show more sophistication concerning fee-related issues: they are more likely to be aware of investment charges, to avoid high-fee funds sold by intermediaries, and to trade less. Moreover, we find that advanced literacy has a significantly larger impact on investment performance than basic literacy. These results can be helpful to the policy debate on the effects of financial education. Keywords: Financial literacy; Mutual fund investment; Investment fees; Retail investors (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:59:y:2020:i:c:s0927538x18305511 DOI: 10.1016/j.pacfin.2019.101242 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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