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Financial literacy and retirement preparation in China

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  • Niu, Geng
  • Zhou, Yang
  • Gan, Hongwu

Abstract

A growing body of literature, which primarily focuses on the developed world, investigates the implications of financial literacy (or lack thereof) on households' well-being. This paper examines the level of financial literacy and its impact on retirement preparation in China, a country that is growing old before getting rich. Drawing on internationally comparable survey questions, we find that a large proportion of Chinese people, especially the elderly, women, and under-educated, lack financial knowledge. The empirical results show that financial literacy has a strong and positive impact on various aspects of retirement preparation among Chinese people, including determining retirement financial needs, making long-term financial plans, and purchasing private pension insurance. Our findings suggest that concrete measures are needed to improve financial literacy so as to increase the awareness of retirement preparation in China.

Suggested Citation

  • Niu, Geng & Zhou, Yang & Gan, Hongwu, 2020. "Financial literacy and retirement preparation in China," Pacific-Basin Finance Journal, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:pacfin:v:59:y:2020:i:c:s0927538x18306358
    DOI: 10.1016/j.pacfin.2020.101262
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    More about this item

    Keywords

    Financial sophistication; Retirement planning; Financial planning; Private pension;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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