Abstract
The level of financial literacy of rural residents will affect their financial decisions and the financial well-being behind the decisions. This paper uses mediating effect and moderating effect to test the influence path of rural residents’ subjective and objective financial literacy on their financial decision-making with survey data from Henan and Anhui provinces in China. The results show that subjective and objective financial literacy have positive effects on financial market participation. Subjective and objective financial literacy have negative direct effects on insurance market participation. Subjective financial literacy plays an incomplete mediating effect in the impact of objective financial literacy on financial market and insurance market participation. Objective financial literacy is adjusted by subjective financial literacy on financial market participation and insurance market participation. At the same time, we introduce financial technology penetration as a threshold variable in the model and find that the financial literacy has stronger impact on financial decision-making if the financial technology penetration is above the threshold.
Highlights
There are few researches on assessing financial behavior based on people’s subjective literacy, an upsurge surrounding subjective financial literacy is taking shape
En, by establishing regression models of subjective financial literacy and objective financial literacy on financial market participation and insurance market participation in two types of financial decision-making, this article tests whether subjective and objective financial literacy has a direct impact on financial decision-making and uses hierarchical regression analysis to test the mediating effect of subjective financial literacy in the impact of objective financial literacy on these two types of financial decisionmaking
Subjective financial literacy plays an incomplete intermediary role in the impact of the objective financial literacy on financial market participation and insurance market participation and the mediating effects account for 26.7% and 12.07%
Summary
Based on the localized research of domestic scholars, this article attempts to introduce the threshold model into the influence path of financial literacy on financial decision-making and analyze it. Is article sets up the individual characteristics of financial technology exposure as a threshold variable to explore the impact path of rural residents’ financial literacy on financial decision-making under the exposure level. Based on the research by scholars’ mentioned above and combined with the threshold effect model, this article proposes the following hypotheses: H1: on the basis of controlling other variables, the subjective financial literacy of rural residents has a direct influence on financial decision-making. Is article further proposes the following hypotheses: H4: on the basis of controlling other variables, the subjective financial literacy of rural residents has a significant moderating effect on the impact of objective financial literacy on financial decision-making. Studies by scholars have shown that other control variables are having a certain amount of influence on financial decision-making, including gender, age, education level, health status, marital status, occupational status, and total income in 2017
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