{"title":"Financial literacy among Chinese rural households and its impact on stock-market participation","authors":"Min Zhao , Ya Dai , Haiyang Chen , Zheng Li","doi":"10.1016/j.bir.2024.05.011","DOIUrl":null,"url":null,"abstract":"<div><p>This study explores financial literacy (FL) and its influence on market participation among rural residents in China. Using the 2017 China Household Finance Survey, we find that rural residents have low FL and answer only 33% of basic and 20.8% of advanced questions on average. The findings indicate a substantial disparity in their FL skills. The ordinary least squares regression results reveal that advanced FL is statistically positively related to market participation. To mitigate endogeneity concerns, we adopt the instrument variable estimator within the generalized method of moment (IV-GMM). The IV-GMM results indicate that FL positively affects the market participation of Chinese rural households. The probability of market participation increases by over 7% with every unit increase in advanced FL scores. Additionally, the robustness tests confirm the positive correlation between advanced FL and market participation. Furthermore, the impact of FL on stock-market participation is more pronounced among rural residents in economically developed regions and those with greater financial assets.</p></div>","PeriodicalId":46690,"journal":{"name":"Borsa Istanbul Review","volume":null,"pages":null},"PeriodicalIF":6.3000,"publicationDate":"2024-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S2214845024000905/pdfft?md5=c244412a04a4c3344aa9c83bcc6a4312&pid=1-s2.0-S2214845024000905-main.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Borsa Istanbul Review","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S2214845024000905","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This study explores financial literacy (FL) and its influence on market participation among rural residents in China. Using the 2017 China Household Finance Survey, we find that rural residents have low FL and answer only 33% of basic and 20.8% of advanced questions on average. The findings indicate a substantial disparity in their FL skills. The ordinary least squares regression results reveal that advanced FL is statistically positively related to market participation. To mitigate endogeneity concerns, we adopt the instrument variable estimator within the generalized method of moment (IV-GMM). The IV-GMM results indicate that FL positively affects the market participation of Chinese rural households. The probability of market participation increases by over 7% with every unit increase in advanced FL scores. Additionally, the robustness tests confirm the positive correlation between advanced FL and market participation. Furthermore, the impact of FL on stock-market participation is more pronounced among rural residents in economically developed regions and those with greater financial assets.
期刊介绍:
Peer Review under the responsibility of Borsa İstanbul Anonim Sirketi. Borsa İstanbul Review provides a scholarly platform for empirical financial studies including but not limited to financial markets and institutions, financial economics, investor behavior, financial centers and market structures, corporate finance, recent economic and financial trends. Micro and macro data applications and comparative studies are welcome. Country coverage includes advanced, emerging and developing economies. In particular, we would like to publish empirical papers with significant policy implications and encourage submissions in the following areas: Research Topics: • Investments and Portfolio Management • Behavioral Finance • Financial Markets and Institutions • Market Microstructure • Islamic Finance • Financial Risk Management • Valuation • Capital Markets Governance • Financial Regulations