Measurement And Determinants Of Chinese Consumer Financial Literacy

Under the influence of multiple factors such as the aging of the population,and the integration of information technology and financial liberalization,the question of how to effectively improve the level of consumer financial literacy and improve the level of family financial welfare has attracted widespread attention from governments,financial institutions and academic circles around the world.Meanwhile,Financial literacy is considered as an important element which affects the development and stability of national economy and finances.As early as the 1960 s,the United States Government,academics,and social forces began to pay attention to and study household finance issues.After years of efforts,the United States government and some financial education institutions has accumulated lots of experience and learned lessons in improving consumer financial literacy and family financial welfare.Overall,the current financial assets and structure of American households have also been optimized and improved to some extent before the 2008 financial crisis,which can be partly attributed to the improvement of US consumer financial literacy.Therefore,in the context of the late start of Chinese consumer financial literacy research,it is important to understand and analyze the characteristics and determinants of Chinese consumer financial literacy in order to effectively improve the level of Chinese consumers' financial literacy.At the same time,it is necessary to draw experience from American practice.According to the situated literacy model and the financial socialization theory,a scientific comparison of research motivation,level and determinants of consumer financial literacy between China and America will be conducive to the realization of this goal.First,based on the literature review,this study categorizes and differentiates concepts of consumer financial literacy according to the literacy theory,and distinguishes the mixed using concepts,and explicitly puts forward the connotation of it,and introduces the theories and methods of financial literacy measurement and the determinants of consumer financial literacy.Second,in order to clarify the goals and priorities of the future research,the author analyzes and compares the motivations of American and Chinese consumer financial literacy by macro and micro data based on the idea of contextual literacy model.The study finds that the research motivation of Chinese consumers' financial literacy is very similar to that of the United States.For example,the arrival of population aging and huge pension pressure,the rapid development of real estate and real estate financial market,the rapid increasing of consumer mortgage behavior.Comparing with the United States,the low level of financial market participation rate and the government's strategic deployment of inclusive finance constitute a special research background for Chinese consumers' financial literacy.Therefore,in the future,the goals and contents of Chinese consumer financial literacy research should focus on:(1)how to ease the huge pension pressure faced by the government and the family based on the perspective of financial literacy,and learn from the successful experience of the United States in this field;2)How to alert and prevent family financial risks by enhancing financial literacy and promoting consumers to participate directly or indirectly in the formal financial market to accumulate family wealth and meet the needs of improving quality of life.Third,in order to fully understand the characteristics of Chinese consumers' financial literacy level,according to the theoretical analysis of the financial literacy dimension,this study constructs objective and subjective consumer financial literacy measurement system.Based on the modern measurement theory-item response theory,the author use the data provided by CFPS2014 to estimate the two types of indices separately,and analyze the characteristics of objective and subjective financial literacy levels of Chinese consumers under different demographic variables.On the other hand,according to the measurement theory and method of consumer financial literacy,this study also makes a theoretical and empirical analysis of the feasibility and implementation framework of the comparison of Chinese and American consumers' financial literacy levels.That is,the study constructs a comparable measurement system for consumer financial literacy between China and the United States based on the analysis of the international comparison conditions for consumer financial literacy levels,and the fact that Lusardi-Mitchell's basic measurement items constitute the core content of international comparison.Based on the measurement methods under classical measurement theory,the author uses the data provided by CFHS2013 and NFCS2015 to measure and compare the objective basic financial literacy levels of Chinese and American consumers.The study finds that:(1)As far as the consumer financial literacy measurement system constructed by the author is concerned,financial skills are the weak link of Chinese consumers compared with the level of financial basic knowledge;compared with consumer behavior management,long-term financial management behavior is seriously lacking for Chinese consumers.(2)The level of objective basic financial literacy of consumers does not fully represent that of objective financial literacy.Consumers' objective financial literacy levels and subjective financial literacy levels also exhibit different characteristics.For example,the objective financial literacy level of male consumers is generally higher,but their subjective financial literacy level is relatively low;the objective financial literacy level declines with age,and the subjective financial literacy level shows the opposite trends;The objective financial literacy level of unmarried consumers is relatively high,but their subjective financial literacy level is relatively low.(3)After comparing with the objective financial literacy of American consumers,it is found that Chinese consumers lag far behind American consumers.(4)The higher the education level of China and the United States or the more disposable income of the family,the higher the objective financial literacy.(5)The objective financial literacy level of consumers in the two countries shows obvious differences in some key demographic variables.For example,the objective financial literacy of consumers in the United States is higher than that of young people.The objective financial literacy of American male consumers is higher than that of female consumers.The United States married consumers have higher levels of objective financial literacy than other marital consumers.China is just showing the opposite trends.In addition,based on the optimal financial literacy level solution of intertemporal asset selection model and financial socialization theory,the study proposes five major factors affecting the level of financial literacy.Based on the five factors,this study makes a theoretical and empirical analysis of the factors affecting the objective financial literacy level of Chinese consumers.At the same time,combining the conclusions of relationship between objective and subjective consumer financial literacy,this study also empirically analyzes the determinants of Chinese consumers' subjective financial literacy level.It also conducts empirical research on the determinants affecting the objective financial literacy of consumers in China and the United States,and compares the results between the two countries.Since financial education is one of the important means for governments in the world to improve the level of consumer financial literacy,some scholars are skeptical about the causal relationship between financial education and consumer financial literacy,In order to further verify the impact of financial education on consumer financial literacy,this study uses the method of propensity value matching to test the relationship financial education and consumer objective basic financial literacy between Chinese and American.The author finds that:(1)The main significant factors affecting the objective financial literacy level of Chinese consumers include gender,age,education level,urban-rural difference in family demographic factors,household disposable income in family factors,socioeconomic status,parental financial knowledge level,and personal factors,personal abilities,time and risk preferences,and the Internet in financial social media agents;The main significant factors affecting the subjective financial literacy level of Chinese consumers include the objective financial literacy level of consumers,the gender in demographic factors,household disposable income in family factors,socioeconomic status,parental financial knowledge level and individual language ability.(2)When considering demographic variables,household economics,financial education,and risk attitude factors,gender,age,education level,ethnic/racial,household disposable income,and financial education are significant variables that affect the objective financial literacy of consumers in China and the United States.In response to the problems reflected in the above empirical analysis,this paper draws the following policy recommendations:(1)In order to scientifically understand the level of Chinese consumer financial literacy,it is necessary to analyze the specific dimensions of financial literacy measurement.(2)Similar to the United States,women,low-income,and low-educated groups should be the focus of future consumer financial education work.(3)The impact of age on Chinese consumers' financial literacy proves that the future financial education and rights protection of Chinese elderly consumers should be the primary goal of government work.(4)Drawing on the specific measures for the popularization of financial education in the United States is an important way to implement the Chinese government's safeguarding consumer financial rights and promoting the development of inclusive finance.(5)The scientific measurement of China's consumer financial literacy and the establishment of a data system are an important long-term task.The government can learn from the strength of the academic community and open data and common use to improve it.Finally,the entire research work of this paper is based on cross-section data.As China's research advances,relevant research results and data on consumer financial literacy will become more and more abundant.In the future,the author will measure the financial literacy of different special financial literacy or groups,and research the trajectory and determinants of the same consumer's financial literacy at different stages of the life cycle,and how the consumer financial literacy can improve the financial market.