Is financial knowledge important to Internet financial participation?

YIN Zhichao1 QIU Hua1

(1.School of Finance, Capital University of Economics and Busines)
【Knowledge Link】consumer loan; E-finance

【Abstract】With the development of Internet finance, opportunities and challenges coexist, so do returns and risks. As a vital factor affecting individual financial behaviors and decisions, will financial knowledge affect people’s Internet financial participation? Which kind of people are more likely to participate in the Internet financial market? Do the participants in Internet finance make windfall profits or in vain? Against the background of the rapid development of Internet finance, the answers to these questions are crucial. Based on the data of China Household Finance Survey in 2017, we empirically validated the influence of financial knowledge on Internet financial participation. The results show that financial knowledge has a significant role in promoting Internet financial participation. In terms of groups, financial knowledge has a stronger impact on the young, middle-aged, male and middle-class groups. For those who have received higher education or work in the financial industry, financial knowledge significantly promotes the Internet financial participation. Furthermore, we concluded that financial knowledge promoted participation in online wealth management, but had no obvious influence on obtaining investment returns. Therefore, in order to reduce the risk of Internet finance and promote its healthy development, China should pay more attention to individual investors and popularize financial knowledge, so that investors will make rational decisions.

【Keywords】 financial knowledge; Internet financial participation; depth of Internet financial participation;


【Funds】 National Social Science Fund of China (16AZ014)

Download this article


    [1]. (1) Source: 01 Think Tank of 01Caijing & iSee. Change and Opportunity: Fifth Anniversary Development Report of Internet Finance, August 8, 2018. [^Back]

    [2]. (2) Source: China Internet Network Information Center. China Statistical Report on Internet Development, August 20, 2018. [^Back]

    [3]. (3) Source: iiMedia Research. 2018 China P2P online lending industry “hot thunder” hot spot monitoring report, July 26, 2018. [^Back]

    [4]. (4) In the 2017 China Household Finance Survey questionnaire, the corresponding question is as follows. Why does your family not buy these Internet financial products? (multiple choice). The options for this question were set as follows. ① No relevant knowledge; ② the purchase procedure is complicated/We do not know how to purchase; ③ high product risk; ④ low returns; ⑤ not interested; ⑥ there are network security problems; ⑦ others (please specify). [^Back]

    [5]. (5) The corresponding question in the questionnaire on online wealth management is as follows. Does your family currently hold online wealth management products such as Yu’e Bao, Jingdong small treasury, Baidu Baizhuan, which are easy for deposition and withdrawal? The answer “yes” to this question means that the family is involved in online wealth management, and “no” means that the family is not involved in online wealth management. [^Back]

    [6]. (6) “Online lending” has two corresponding questions in the questionnaire. Among them, the question about the lenders in online lending is as follows. Does your family have any loans on an online lending platform, such as P2P online lending and crowdfunding platforms. There are the options of“yes” and “no.” for the question. The question about borrowers in online lending is as follows. Has your family ever obtained funds for consumption through financial means such as Ant Check Later,, and online lending? There are the options of “yes” and “no.” [^Back]

    [7]. (7) Selecting “yes” in the question of online wealth management or “yes” in the question for lenders on online lending. [^Back]

    [8]. (8) Selecting “yes” in the question on online lending for borrowers. [^Back]

    [9]. (9) This paper defines assets used for online wealth management according to the following questions. ① What is the balance of the online wealth management products currently purchased by your family? ② Which of the following ranges is the balance of the online wealth management products currently owned by your family? [^Back]

    [10]. (10) With regard to the definition of online wealth management income, the corresponding questions in the questionnaire are as follows. How much income has your family actually obtained from such online wealth management products in the past year? Which of the following ranges do you estimate corresponds the income that your family has actually obtained such online wealth management products? According to the answers to this question, this paper obtains the specific value of income from online wealth management. [^Back]

    [11]. (11) The corresponding question on risk attitude in the questionnaire is as follows. If you have a sum of money to invest, which investment project would you like to choose most? The options set for this problem are as follows: ① high-risk and high-return projects; ② projects with slightly higher risks and slightly higher returns; ③ projects with average risks and average returns; ④ projects with slightly lower risks and slightly lower returns; ⑤ unwilling to undertake any risks. In this paper, the choice of ① or ② is defined as risk preference, ③ as risk neutrality, and ④ or ⑤ as risk aversion. [^Back]

    [12]. (12) Due to space limitation, the descriptive statistical results of variables are not reported. The details are in the public annex or are available for request. [^Back]

    [13]. (13) Due to space limitation, the specific empirical results are not reported, which are available upon request. [^Back]

    [14]. (14) Due to space limitation, the specific empirical results are not reported, which are available upon request. [^Back]

    [15]. (15) Due to space limitation, the specific empirical results are not reported, which are available upon request. [^Back]

    [16]. (16) Due to space limitation, the specific empirical results are not reported, which are available upon request. [^Back]


    1. Huo, B. & Zhang, Y. Macroeconomics (宏观经济研究), (2) (2015).

    2. Jin, Y. Journal of Shanghai Lixin University of Accounting and Finance (上海立信会计金融学院学报), (1) (2015).

    3. Li, J. Management World (管理世界), (7) (2015).

    4. Li, Y., Xu, S. & Bai, L. Macroeconomics (宏观经济研究), (3) (2018).

    5. Sun, C. & Li, H. Southwest Finance (西南金融 ), (6) (2014).

    6. Wang, X. Journal of Financial Research (金融研究), (9) (2015).

    7. Wang, Z., Deng, Y. & Liao, L. Journal of Financial Research (金融研究), (12) (2015).

    8. Wu, X. Finance & Trade Economics (财贸经济), (2) (2015).

    9. Wu, X. Finance & Trade Economics (财贸经济), (1) (2014).

    10. Yin, Z., Song, Q. & Wu, Y. Economic Research Journal (经济研究), (4) (2014).

    11. Yin, Z., Song, Q., Wu, Y. et al. Management World (管理世界), (1) (2015).

    12. Zhan, M., Zhang., C. & Shen, J. Economic Research Journal (经济研究), (4) (2018).

    13. Zhang, H. & Yin, Z. Journal of Financial Research (金融研究), (7) (2016).

    14. Zhao, D. & Qu, X. Journal of Southwest Minzu University (Humanities and Social Sciences) (西南民族大学学报(人文社会科学版)), (3) (2016).

    15. Dohmen, T., Falk, A., Huffman, D., & Sunde, U., Are Risk Aversion and Impatience Related to Cognitive Ability?. American Economic Review, Vol. 100, No. 3, 2010, pp. 1238–1260.

    16. Guiso, L., Sapienza, P., & Zingales, L., Trusting the Stock Market. The Journal of Finance, Vol. 63, No. 6, 2008, pp. 2557–2600.

    17. Hoehle, H., Cornavacca, E. S.,& Huff, S., Three Decades of Research on Consumer Adoption and Utilization of Electronic Banking Channels: A Literature Analysis. Decision on Support Systems, Vol. 54, No. 1, 2012, pp. 122–132.

    18. Huston, S. J., Measuring Financial Literacy. Journal of Consumer Affairs, Vol. 44, No. 2, 2010, pp. 296–316.

    19. Jappelli, T., & Padula, M., Investment in Financial Literacy and Saving Decisions. Journal of Banking and Finance, Vol. 37, No. 8, 2013, pp. 2779–2792.

    20. Laukkanen, T., Internet vs Mobile Banking: Comparing Customer Value Perceptions. Business Process Management Journal, Vol. 13, No. 6, 2007, pp. 788–797.

    21. Lewis, M., Flash Boys: A Wall Street Revolt. New York: W. W. Norton & Company, 2014.

    22. Lusardi, A., & Mitchell, O. S., Financial Literacy and Retirement Planning in the United States. Journal of Pension Economics and Finance, Vol. 10, No. 4, 2011, pp. 509–525.

    23. Lusardi, A., & Mitchell, O. S., The Economic Importance of Financial Literacy: Theory and Evidence. Journal of Economic Literature, Vol. 52,No. 1, 2014, pp. 5–44.

    24. Milliment,D. L., Mcdonough, I. K., & Fomby, T. B., Financial Literacy and Food Security in Extremely Vulnerable Households. Social Science Electronic Publishing, 2015.

    25. Noctor, M., Stoney, S., & Stradling, R., Financial Literacy: A Discussion of Concepts of Financial Literacy and opportunities for Its Introduction into Young People’s Learning. Report Prepared for the National Westminster Bank. London: National Foundation for Education Research, 1992.

    26. Rooij, M. V., Lusardi, A., & Alessie, R., Financial Literacy and Stock Market Participation. Journal of Financial Economics, Vol. 101, No. 2, 2011, pp. 449–472.

This Article


CN: 11-1166/F

Vol 40, No. 06, Pages 70-84

June 2019


Article Outline



  • 1 Introduction
  • 2 Literature review
  • 3 Theoretical analysis
  • 4 Empirical models, data and variables
  • 5 Empirical result
  • 6 Heterogeneity analysis (14)
  • 7 Further analysis
  • 8 Robustness test
  • 9 Conclusion and suggestion
  • Footnote