Effects of debt dynamics and financial literacy on consumer market behavior

Yingjie Deng, Jing Kang, Yan Wang, Zhicheng Hu and Wei Gong

Finance Research Letters, 2025, vol. 72, issue C

Abstract: The consumption upgrading strategy and the dual circulation model position consumption as a critical driver of China's economic growth. Although the development of inclusive finance has somewhat promoted short-term consumption, challenges such as low financial literacy and rising debt burden threaten the sustainability of consumption. This study utilizes data from the 2013–2019 China Household Finance Survey, employing fixed-effect models to examine the impact of household debt on consumption. We also quantify financial literacy's role in moderating debt's influence on consumer behavior.

Keywords: Household debt; Liability structure; Household consumption; Financial literacy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015708

DOI: 10.1016/j.frl.2024.106541

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