Can Financial Literacy Improve The Financial Resilience Of Chinese Households?

At present,the global economy is generally depressed due to the impact of the COVID-19 pandemic.Domestically,Chinese household income has been negatively impacted in the short term,and some households have limited financial resilience.The uncertainty of the pandemic will trigger strong precautionary saving behavior,which will further lead to the decline of household consumption expenditure.From the perspective of finance,at present,with the rapid development of digital finance,traditional financial products are constantly being innovated.In this process,in addition to the role of experts,it is necessary to have the active participation of the masses,which leads to higher and higher requirements for residents’financial literacy.Residents with a higher level of financial literacy will actively participate in the financial market to obtain more financial services,and can effectively use and flexibly allocate their own funds to make correct financial decisions to increase family wealth.Therefore,on the basis of reading domestic and foreign literature,this paper clarifies the concepts of financial literacy and family financial resilience,and uses the comprehensive index system method to construct a measurement index of family financial resilience from four dimensions,namely resistance,resilience,adaptability and renewal.Eight indicators,including risk absorption ability,risk resistance ability,asset liquidity,household savings level,household income level,income stability,wealth appreciation ability and education investment level,are used to measure household financial resilience.This paper studies whether financial literacy can improve the financial resilience of Chinese households,and expounds the ways and mechanisms of financial literacy affecting household financial resilience.Based on the data of China household finance survey in 2019,OLS model and Tobit model were used for regression.The results show that financial literacy plays a significant role in promoting household financial resilience.Through mechanism analysis,this paper finds that financial literacy can improve household financial resilience by improving residents’ risk attitude and increasing household portfolio diversification.In this paper,instrumental variable method is used to analyze the endogeneity problem,and the robustness of regression results is tested by excluding extreme values,replacing core explanatory variables,and converting database.Through heterogeneity analysis,it is found that the financial resilience of low-income households with middle-aged female heads in the eastern region is more significantly affected by financial literacy.Based on the analysis results,it is suggested to increase the intensity and investment of financial education.Cultivate good risk attitude of residents,popularize financial risk knowledge regularly,and guide residents to make rational diversified investment;Increase financial product innovation efforts,expand household credit channels to improve residents’ financial literacy,enhance household financial resilience to cope with and resist risks.