The Empirical Study On The Influence Of Financial Literacy On Urban Household' Credit Availability

Developing inclusive finance will be one of the main task for China's financial industry in the future,whose final goal is to establish a financial system which can offer equal financial services for Social classes and groups.And developing inclusive finance can also play an important role in promoting economic development and social harmony.But,due to the urban-rural dual financial structure?scarcity of credit resources and the reason of the person who wants to borrow money in China,there are still amounts of household credit needs cannot be met,which can seriously hinder the development of inclusive finance.As the embodiment of financial cognitive ability,financial literacy is pretty important.On the one hand,financial literacy can directly affect household's credit decisions;On the other hand,it can help families take an active part in financial markets to allocate assets and accumulate wealth,and that in turn affects household credit availability.On this basis,my paper will use the data in Chinese Family Panel Studies(2014)from China social science research center of Peking University,basing on the families of urban residents,to study the influence of financial literacy to household credit availability.My paper will choose the credit availability as the dependent variable,and choose the subjective financial literacy and objective financial literacy as the independent variables.More detailed,the dependent variable is from the questionnaire topic——"is there any loan rejection experience?" If not just represents the family has the credit availability,both formal and informal.Then my paper will establish a model called Probit model to analysis the influence of financial literacy to the credit availability.Thinking about the endogeneity of the financial literacy,my paper choose the variable——"Parents' financial literacy level" as the instrumental variable,then establish the model called IVProbit model to do the empirical test.Last,my paper decide to divide the dependent variable into there parts:"1=there is no loan rejection experience"?"2=there is informal loan rejection experience"?"3=there is formal loan rejection experience",and my paper will choose objective financial literacy as the independent variables to establish the model called Multinomial Probit model.This is to study the influence of financial literacy to formal and informal credit availability.Finally,my paper draws these following conclusions:(1)From the description of the credit situation of the urban residents,about 66%families will choose informal lenders to borrow money if they have difficulties in money.And About the credit availability,more than 68%can get it.By contrast,families who are women or healthy will have more advantages.(2)From the urban residents financial literacy level distribution description,there financial literacy is on average and still need to improve,especially the person who is a woman,or who is old,or who has lower educational background.(3)From the empirical results of the influence of financial literacy to credit availability,subjective financial literacy and objective financial literacy suppose to have a significant positive correlation with family credit availability,and objective financial literacy has a stronger influence.After the credit availability divided there parts,the result shows that relative to informal credit availability,financial literacy has a stronger influence on formal credit availability.On this basis,my paper will further put forward relevant countermeasures and suggestions on promoting financial knowledge development,strengthening financial education and improving the availability of family credit.One the one hand,this study will contribute to improve national financial literacy and improve household credit availability,which can provide valuable references for effectively reducing financial exclusion and promote inclusive financial development.On the other hand,this study can also contribute to perfect related research about urban household's credit financing and inclusive finance.