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Effects of debt dynamics and financial literacy on consumer market behavior

Author

Listed:
  • Deng, Yingjie
  • Kang, Jing
  • Wang, Yan
  • Hu, Zhicheng
  • Gong, Wei

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.

Suggested Citation

  • Deng, Yingjie & Kang, Jing & Wang, Yan & Hu, Zhicheng & Gong, Wei, 2025. "Effects of debt dynamics and financial literacy on consumer market behavior," Finance Research Letters, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:finlet:v:72:y:2025:i:c:s1544612324015708
    DOI: 10.1016/j.frl.2024.106541
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