Impact of Financial Literacy on Individuals’ Financial Decisions: A Comparative Analysis of Eastern, Central, and Western Regions in China

Abstract

This study examines the following research questions: 1. What are the main characteristics of financial literacy in China? 2. Are there differences in the levels of financial literacy between regions? 3. What are the factors affecting financial literacy? It uses data gathered from a survey of 474 respondents. The findings reveal different financial literacy characteristics across China’s three major regions and allow for an exploration of the influencing factors and corresponding impacts on financial decisions. The financial literacy levels exhibit a decreasing trend from East to West, with small differences in the mean value. Overall, financial literacy is most strongly correlated with deposits, followed by funds, stocks, and emergency savings decisions. However, different regions perform differently in various aspects of financial literacy. Drawing from the findings, the paper proposes some policy recommendations.

Keywords

• financial literacy
• financial behavior
• portfolio diversification
• financial decision