Financial literacy and household financial resilience

Taixing Liu, Miaomiao Fan, Youwei Li and Pengpeng Yue

Finance Research Letters, 2024, vol. 63, issue C

Abstract: Rising uncertainty has drawn researchers’ attention towards households’ anti-risk capacities. Using data from the China Household Finance Survey covering 2019 to 2021, this study investigates the impact of financial literacy on household financial resilience. We measure household financial resilience by analyzing inter-period variations in liquid assets pre- and post-Covid-19, coupled with constructing a sensitivity index. Our analysis indicates that financial literacy significantly enhances financial resilience through the wealth effect and risk mitigation effect. This study highlights the critical role of financial literacy in mitigating risks and accelerating recovery from financial disturbances.

Keywords: Financial literacy; Household financial resilience; Wealth effect; Risk mitigation effect (search for similar items in EconPapers)
JEL-codes: D10 G50 G53 I31 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324004082

DOI: 10.1016/j.frl.2024.105378

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