【IMIWorkingPaperNo.1913[EN]】FinancialCapabilityandtheHouseholdsFinancialDecision-makingProcess

Since the continuous development of Financial technology (or FinTech), the households are increasingly faced with making highly sophisticated financial decisions. In this article, we investigate the effects of financial capability on household financial participation. We find that financial capability can promote households’ participation in financial market. Households with high financial capability can make good use of financial services and make proper financial decisions, and reduce the probability of households’ financial exclusion. We also find that people with rich financial knowledge are more likely to participate in the risky asset holdings because this will help increase their likelihood of profitability. In addition, improvements in economic and financial environment will increase people’s income and property, the high level of financial education will exert an positive influence on household financial market participation and financial risk management. Our findings suggest that enhancing the households’ financial capability is an important means to promote making more informed financial choices and securing the financial well-being of households. The policy implication is that strengthening financial capability will help stabilize finance, enhance financial inclusiveness, and facilitate the effective operation of financial markets.

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Xiu Jing，Research Fellow of IMI, School of Economics, University of Chinese Academy of Social Sciences，Beijing China,102488

Zhou Linjie.

Du Lin.