Research On The Influence Of Cognitive Ability On Family Financial Exclusion

In recent years,with the national strategic development of inclusive finance and the accompanying development of digital inclusive finance,traditional inclusive finance has entered a new stage of development.However,there are still a large number of households in China that are excluded from the financial market system,and financial exclusion is still prominent.At the same time,the education level of Chinese residents has improved significantly compared to the past,which is manifested by the gradual decrease of the loweducated group and the gradual increase of the proportion of people who receive higher education.The human capital structure of the whole society has improved significantly.However,due to the large spatial differences in the distribution of education resources and the uneven quality of education in China,this may lead to the education level not being able to fully measure human capital.Measuring human capital status solely by education level will seriously overestimate the impact of education on oneself and omit important information from other aspects.Cognitive ability,as a comprehensive ability to acquire,process and deal with information,can reflect both individual innate ability endowment and the impact of school education on oneself,thus playing a key role in human capital.Based on the analysis of social background,this thesis introduces cognitive ability and family financial exclusion into the same research framework to explore the impact of cognitive ability on family financial exclusion.Firstly,this thesis reviews relevant literature on cognitive ability and financial exclusion both domestically and internationally,summarizes their relevant theories,such as the New Human Capital Theory,Inclusive Finance Theory,and Financial Exclusion Theory,and proposes research hypotheses based on the above analysis.Then,this thesis uses the data from the 2018 China Family Panel Studies(CFPS),based on the test of household financial respondents,to build cognitive indicators,and establish a probit model to empirically analyze cognitive ability and household financial exclusion,and solve their endogenous problems through instrumental variables.Secondly,sub samples are divided according to registered residence,income and age,and grouped regression is conducted to study whether there is heterogeneity in the impact of cognitive ability on household financial exclusion.Finally,two mediating variables,financial literacy and online interaction,are selected to analyze the transmission mechanism of cognitive ability on household financial exclusion by using a stepwise regression method.The robustness test of the previous regression is conducted by re-measuring cognitive ability,re-measuring household financial exclusion and truncation treatment.The research results show that: First,the improvement of cognitive ability will significantly reduce the probability of financial exclusion in households.In terms of dimensions,verbal ability,mathematical ability and memory ability also have a significant negative impact on family financial exclusion.Secondly,there is heterogeneity in the impact of cognitive ability on household financial exclusion.For socially disadvantaged groups such as rural families,low-income families,and elderly families,the impact of cognitive ability on family financial exclusion is smaller than that of the dominant social groups,namely urban families,high-income families,and middle-aged and young families.Thirdly,financial literacy and online interaction play a partial mediating role between cognitive ability and family financial exclusion,indicating that the path of reducing family financial exclusion through cognitive ability is partially driven by financial literacy and online interaction.Finally,based on the theoretical analysis and empirical testing mentioned earlier,this article provides targeted policy recommendations from the perspectives of individuals,governments,and financial institutions.Firstly,individuals should strengthen their cognitive abilities,actively engage in financial knowledge learning,improve their financial literacy,and enhance their understanding of financial services and financial risks;Secondly,the government should guide education resources to tilt towards vulnerable groups,narrow the education gap,achieve equal access to public education services,promote internet construction,and enhance the digital literacy skills of the entire population;Finally,financial institutions should differentiate the development of financial products to match the cognitive abilities of various groups.