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Social Indicators Research
Published in: Social Indicators Research 2/2017

23-03-2016

Financial Literacy, Portfolio Choice and Financial Well-Being

Authors: Zhong Chu, Zhengwei Wang, Jing Jian Xiao, Weiqiang Zhang

Published in: Social Indicators Research | Issue 2/2017

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Abstract

This study examined potential effects of financial literacy on household portfolio choice and investment return, an indicator of financial wellbeing. Using data from the 2014 Chinese Survey of Consumer Finance, financial literacy was measured and further categorized into basic financial literacy and advanced financial literacy. This study tested the hypothesis that financial literacy affects household choice between stock and mutual fund. The results indicated that households with higher financial literacy, especially those with higher level of advanced financial literacy tended to delegate at least part of their portfolio to experts and invest in mutual fund. However, households who were overconfident about their financial literacy tended to invest by themselves and were more likely to hold only stocks in their portfolios. The findings also indicated that households with higher financial literacy had a better chance of receiving a positive investment return, suggesting that higher financial literacy may result in a better financial outcome.
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Appendix
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Metadata
Title
Financial Literacy, Portfolio Choice and Financial Well-Being
Authors
Zhong Chu
Zhengwei Wang
Jing Jian Xiao
Weiqiang Zhang
Publication date
23-03-2016
Publisher
Springer Netherlands
Published in
Social Indicators Research / Issue 2/2017
Print ISSN: 0303-8300
Electronic ISSN: 1573-0921
DOI
https://doi.org/10.1007/s11205-016-1309-2

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