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Financial literacy and household financial resilience

Author

Listed:
  • Liu, Taixing
  • Fan, Miaomiao
  • Li, Youwei
  • Yue, Pengpeng

Abstract

Rising uncertainty has drawn researchers’ attention towards households’ anti-risk capacities. Using data from the China Household Finance Survey covering 2019 to 2021, this study investigates the impact of financial literacy on household financial resilience. We measure household financial resilience by analyzing inter-period variations in liquid assets pre- and post-Covid-19, coupled with constructing a sensitivity index. Our analysis indicates that financial literacy significantly enhances financial resilience through the wealth effect and risk mitigation effect. This study highlights the critical role of financial literacy in mitigating risks and accelerating recovery from financial disturbances.

Suggested Citation

  • Liu, Taixing & Fan, Miaomiao & Li, Youwei & Yue, Pengpeng, 2024. "Financial literacy and household financial resilience," Finance Research Letters, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:finlet:v:63:y:2024:i:c:s1544612324004082
    DOI: 10.1016/j.frl.2024.105378
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    References listed on IDEAS

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    2. Safaa Basabreen, 2025. "Examining the Relationship Between Different Dimensions of Subjective Well-being and Savings Behaviour: Insights From UK Panel Data," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 20(3), pages 941-975, June.
    3. Wang, Guan & Zhang, Mengchen & He, Beiting, 2024. "Financial literacy and investment returns: The moderating effect of education level," Finance Research Letters, Elsevier, vol. 67(PA).
    4. Leonore Riitsalu & Agata Gąsiorowska & W. Fred Raaij & Kai Ruggeri, 2025. "Longitudinal Assessment of Financial Well-Being Across Europe Confirms the Multidimensionality of the Construct," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 178(1), pages 279-303, May.
    5. Wang, Luanfeng & Dang, Chongqing, 2025. "Financial literacy and residents' health levels," International Review of Economics & Finance, Elsevier, vol. 102(C).
    6. K. Devender & Kafila & Gurunadham Goli & M. Shravan, 2026. "Exploring financial literacy among small business owners and entrepreneurs: trends and insights from 1993 to 2025," SN Business & Economics, Springer, vol. 6(3), pages 1-32, March.
    7. Yuan, Gecheng & Lu, Weijie & Wu, Xinyi & Zhou, Li, 2025. "The gig economy and household financial vulnerability," China Economic Review, Elsevier, vol. 94(PB).
    8. Zhan, Xinyu & Liang, Lanxin & Yu, Mingzhe, 2025. "Tax incentives and household consumption: Evidence from the personal income tax reform," Finance Research Letters, Elsevier, vol. 77(C).
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    10. Tao, Miaomiao & Lin, Boqiang & Poletti, Stephen & Pan, Addison, 2024. "Can financial literacy Ease energy poverty? Some Lessons at the household level in China," Utilities Policy, Elsevier, vol. 91(C).
    11. António Afonso & Eduardo Rodrigues, 2026. "Financial Literacy and Saving Behavior: Global Cross-Sectional Evidence," Working Papers REM 2026/0403, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    12. Peng, Geng & Liu, Fang, 2024. "Digital inclusive finance and the resilience of households involved in financial markets," Finance Research Letters, Elsevier, vol. 69(PB).
    13. Zhang, Cheng & Ling, Xiaohong & Weng, Xiyan, 2024. "Effect of low carbon policy on residents’ health: Evidence from China," Finance Research Letters, Elsevier, vol. 70(C).
    14. Macchiati, Valentina & Cappiello, Lorenzo & Giuzio, Margherita & Ianiro, Annalaura & Lillo, Fabrizio, 2025. "When margins call: liquidity preparedness of non-bank financial institutions," Working Paper Series 3074, European Central Bank.

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    Keywords

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    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • G50 - Financial Economics - - Household Finance - - - General
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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