The Relationship Between Farmers' Financial Literacy And Investment And Wealth

The fifth plenary session of the 18th central committee of the communist party of China(CPC)has set the goal of poverty alleviation in the new era and achieved "two guarantees" by 2020.By the end of 2018,there were 16.6 million people living in poverty,13.86 million fewer than the previous year,and the poverty rate was 1.7 percent,according to data released by the national bureau of statistics.By region,the proportion of the poverty-stricken population in the eastern and western regions is 8.9%,31.02%and 55.18%respectively,which means that the western region has the highest incidence of poverty,indicating that the task of poverty alleviation in the western region is very arduous.In addition,the "consumer financial literacy survey" organized by the financial and consumer protection bureau of the people’s bank of China from 2016 to 2017 shows that residents in western China lag behind those in central and eastern China in terms of financial education,savings,credit and loan risks.Under the above realistic conditions,it is particularly urgent to deeply study the financial literacy and financial behavior of rural residents in western poverty-stricken areas and reveal their wealth formation mechanism.In this paper,with theoretical analysis and empirical research method of combining the model,the fanners financial literacy and risky assets investment,financial literacy and individuals to explore the relationship between the accumulation of wealth,the analysis of the influence factors of financial literacy,trying to explore farmers financial literacy,investment behavior,internal logic between personal wealth,and provide practical solutions to improve the level of peasant household financial literacy.In terms of theory,this paper is divided into two stages.First,an inter-period selection model of farmers’ financial literacy is established,and a two-stage consumption constraint equation is established by introducing the proportion coefficient of risk assets.Under this assumption,the optimal level of financial literacy and the proportion of risk assets of consumers’ utility maximization are solved.Then the model is extended to multiple stages,and the relationship between individual wealth accumulation and financial literacy is inverted u-shaped under the condition of utility maximization in the whole life cycle.Finally,the inverted u-shaped relationship between personal wealth and financial literacy is demonstrated by data simulation from the perspective of survey data.In empirical aspect,with the help of the questionnaire data,kang county and village level of financial literacy of 995 peasant households,then discuss the farmers financial literacy and the relationship between four kind of investment behavior,including:the credit behavior,productive investment intention,correct selection and investment in fixed assets investment,and farmers financial literacy and the relationship between personal income,the results are displayed as stable,significant positive correlation relationship.Finally,the reasons for the formation of farmers’ financial literacy were explored.The regression results showed that the contribution rate of farmers’ personal income to their financial literacy was the largest,followed by the age of household head.As the above empirical models all have endogenous problems,instrumental variables are introduced.Because of northwest peasant household financial literacy and investment,there is a positive correlation relationship between personal wealth,therefore,to improve the farmers’ income and wealth can be achieved by raising its level of financial literacy,farmers should be according to the present actual financial literacy levels,according to their different age,different level of education and the characteristics of different income levels,different financial education plan,at the same time,the innovative financial products,to meet the demand of the farmer’s production development,in addition,more important is to increase the poverty-stricken areas farmers financial literacy problems to national strategy,China’s financial education development foundation,local pedestrian and circ all develop and broaden its function,Popularize rural finance education systematically,perfect rural finance market.