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Knowledge Changes Fate: Can Financial Literacy Advance Poverty Reduction In Rural Households?

Author

Listed:
  • SHULIN XU

    (School of Economics, Jinan University, Guangzhou 510632, P. R. China)

  • ZHEN YANG

    (��School of Business Administration, Dongbei University of Finance and Economics, Dalian 116025, P. R. China)

  • ZEFENG TONG

    (��School of Public Finance and Taxation, Zhongnan University of Economics and Law, Wuhan 430073, P. R. China)

  • YUNFENG LI

    (�School of Finance, Jiangxi Normal University, Nanchang 330022, P. R. China)

Abstract

Poverty reduction and inclusive growth in poor rural areas attracted the increasing attention of governments and scholars around the world. We investigate financial literacy by conceptualizing its impacts on rural households’ poverty reduction, considering current and long-term economic income dynamics. Using a database from 2015 to 2017 China Household Finance Survey, we find that financial literacy has current and long-term effects on promoting rural households’ status by eliminating and effectively improving poverty (dynamic effects). Second, this study reveals that financial literacy and education have a significant complementary effect on rural households’ poverty reduction. The study distinguishes financial literacy from knowledge obtained through general education. Third, financial education is shown to significantly improve rural households’ financial literacy on and enhance poverty reduction. The policy implications of our findings include that the governments and financial institutions are also required to rigorously measure, understand and improve financial literacy. Reform of financial regulatory systems must include a national strategy for education projects and improvement in the quality and supervision of financial products and services.

Suggested Citation

  • Shulin Xu & Zhen Yang & Zefeng Tong & Yunfeng Li, 2023. "Knowledge Changes Fate: Can Financial Literacy Advance Poverty Reduction In Rural Households?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(04), pages 1147-1182, June.
    • Handle: RePEc:wsi:serxxx:v:68:y:2023:i:04:n:s0217590821440057
    DOI: 10.1142/S0217590821440057
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    Citations

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    Cited by:

    1. Ngoc Duc Lang & Ha Mai Tran & Giang Tra Nguyen & Duc Hong Vo, 2024. "An Untapped Instrument in the Fight Against Poverty: The Impacts of Financial Literacy on Poverty Worldwide," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 174(2), pages 657-695, September.
    2. Zhonggang Yue & Chong Wang & Hui Hong, 2025. "Inclusive development of digital finance, family entrepreneurship and poverty reduction effect," International Entrepreneurship and Management Journal, Springer, vol. 21(1), pages 1-28, December.
    3. Shulin Xu & Kangqi Jiang, 2024. "Knowledge creates value: the role of financial literacy in entrepreneurial behavior," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.

    More about this item

    Keywords

    Financial literacy; rural household poverty reduction; inclusive growth; financial education; heterogeneity analysis;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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