Unravelling the impact of financial attention on household debt: Evidence from the China household finance survey

Abstract

With the popularization of Internet, it is more convenient for households to obtain economic and financial information, while information overload leads to attention becoming a scarce resource, which affects household debt management. Based on the data of China Household Finance Survey in 2019, this paper uses a series of estimation methods, including least squares regression (OLS), generalized moment estimation (GMM), instrumental variable (IV), and propensity score matching (PSM), to study the impact of financial attention on household debt. The study finds that financial attention has a significant negative effect on the household debt ratio, that is, the higher the attention, the lower the debt ratio. This effect can be achieved by improving financial literacy, increasing risk appetite, and promoting financial market participation. In addition, higher financial attention also increase the size, type, and expected cost of household debt.