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Financial literacy and formal credit accessibility: Evidence from informal businesses in China

Nana Xu, Jingye Shi, Zhao Rong and Yan Yuan

Finance Research Letters, 2020, vol. 36, issue C

Abstract: There is a sizable informal business sector in emerging markets. This paper investigates informal businesses’ accessibility to formal credit in China and their owners’ financial literacy as a potential determinant. By examining informal businesses in urban areas from the 2015 China Household Finance Survey, we find that business owners’ financial literacy is positively associated with the likelihood of their businesses holding bank loans. This positive relationship only exists among businesses whose owners have rural hukou and it is more pronounced in areas where formal-credit accessibility is lower.

Keywords: Formal credit; Financial literacy; Informal businesses; China (search for similar items in EconPapers)
JEL-codes: G21 L26 O16 O17 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/

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