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Financial literacy and household financial resilience

Author

Listed:
  • Liu, Taixing
  • Fan, Miaomiao
  • Li, Youwei
  • Yue, Pengpeng

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.

Suggested Citation

  • Liu, Taixing & Fan, Miaomiao & Li, Youwei & Yue, Pengpeng, 2024. "Financial literacy and household financial resilience," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324004082
    DOI: 10.1016/j.frl.2024.105378
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial literacy; Household financial resilience; Wealth effect; Risk mitigation effect;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • G50 - Financial Economics - - Household Finance - - - General
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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