Can financial literacy enhance household financial risk asset allocation? Based financial planning and the mediating role of Taoist culture

Purpose - This study examines the impact of enhanced financial literacy on the allocation of risky assets within household financial portfolios, while also considering the mediating role of Taoist cultural influences. Design/methodology/approach - The authors applied ordered probit models and ordinary least squares estimation to analyze a sample of 19,015 data collected from the 2019 Chinese Urban Household Consumer Finance Survey. Findings - The results demonstrate that an improvement in financial literacy significantly contributes to an increase in residents’ allocation of risky assets. This enhancement in financial literacy, achieved through financial planning and a reduction in the influence of Taoist culture, effectively bolsters the quantity of risky financial assets held. Moreover, the impact of financial literacy on the allocation of risky financial assets is particularly pronounced among residents aged 45–55 and those aged 35–45 and older. Practical implications - The practical implications suggest that policymakers and relevant departments may consider strategies to encourage greater participation in the financial market by promoting Taoist culture in an appropriate and reasonable manner while widely carrying out financial education for residents and improving their financial literacy. Originality/value - While previous studies have not focused on the impact of traditional culture on financial decision-making allocations, this study investigates the significant impact of financial literacy and Taoist culture on risky asset allocations, highlighting in particular the significant impact on middle-aged residents. This provides a nuanced understanding of how financial literacy affects investment behavior and offers insights for policymakers to effectively tailor financial education programs.