The Study On The Effects Of Financial Literacy On Chinese Household's Wealth Accumulation And Distribution

Since adoption of reform and open policy,the per capita disposable income of residents has soared and the national economic development level has been improved.At present,Chinese economic development has entered a stage from high-speed to high-quality development.However,in the process of achieving high-quality economic development,there are still two important issues in front of us: first,the household asset allocation in China is still dominated by interest-bearing assets such as savings and finance products,coupled with the fact that the proportion of risky assets is relatively small and residents can not fully enjoy the dividends brought by the development of capital market;second,with the development of the economy,there still exists wealth inequality.Under this context,this paper attempts to research on the underlying causes of this phenomenon from the perspective of the characteristics of economic behavior of micro-individuals,introduces the family financial literacy as a variable to analyze the impact of financial literacy on the accumulation and distribution of household wealth and to discusse the causes of the above problems from the perspective of financial literacy.Based on theoretical analysis,this paper uses the data of China Family Panel Studies(CFPS)in 2014 to study the effect and mechanism of financial literacy on the accumulation and distribution of household wealth.The article mainly draws the following conclusions.Firstly,family financial literacy has a significant positive impact on family wealth accumulation.The higher the level of financial literacy owns,the higher the total wealth level is.In the deeper analysis from the sub-sample,it is found that the impact of financial literacy on households in different regions is heterogeneous and the impact on the western region is more significant.Secondly,households with higher financial literacy level have three characteristics: the higher participation in financial markets,the higher possibility of profitability in financial markets and the more decentralized asset allocation.These characteristics greatly promote the accumulation of wealth in financial markets and increase the total value of wealth.Thirdly,the improvement of financial literacy level can effectively narrow the wealth gap between families and reduce wealth inequality.Financial literacy has a more significant impact on the "wealth creation" of the low-wealth group than the families with higher wealth level.Therefore,the government should further publicize financial literacy,strengthen financial education and training to the public,optimize the structure of family assets to effectively enhance the accumulation of family wealth and narrow the wealth gap between families.