Financial Literacy and Household Borrowing Behavior Based on an Analysis of China Household Finance Survey Data

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  • 金融リテラシーと中国の家計の借入行動――CHFSデータを用いた実証研究―――
  • キンユウ リテラシー ト チュウゴク ノ カケイ ノ カリイレ コウドウ : CHFS データ オ モチイタ ジッショウ ケンキュウ

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<p>This paper examines the relationship between financial literacy, an important factor in determining the financial behavior of households, and the borrowing behavior of Chinese households whose debt has been rapidly expanding. By using data from the China Household Finance Survey and dividing debt into different categories (business debt, housing debt, and consumer debt), this paper shows how financial literacy affects actual household debt accumulation and distribution. The main findings of this paper are as follows: (1) higher financial literacy is linked to household debt, while lower financial literacy is correlated with excessive debt, suggesting that financial literacy helps households to rationally manage their assets such as by effectively controlling household debt risk and reducing the risk of excessive debt; (2) financial literacy does not affect housing-related debt because the housing loan market in China is not competitive; and (3) financial literacy has a strong positive effect on consumption debt.</p><p>This paper demonstrates the important role that financial literacy plays in the rapidly expanding household finance market in China. Along with digital banking services provided by conventional commercial banks as well as borrowing services from small loans platforms such as Alibaba and Tencent, financial literacy is expected to become increasingly essential for consumers. Therefore, improving financial literacy can promote healthy borrowing behavior and reduce the risks associated with consumer finance and financial markets as a whole.</p>

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  • Ajia Keizai

    Ajia Keizai 62 (4), 3-24, 2021-12-15

    Institute of Developing Economies, Japan External Trade Organization

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