Digital economy, financial literacy, and financial risk-taking in rural households

Abstract

This study examines the relationship between the digital economy, financial literacy, and rural households' financial risk-taking. Using data from the 2011–2019 China Household Finance Survey (CHFS), the study measures digital economy development through factor analysis, the entropy method, and comprehensive aggregation, and conducts empirical tests with probit and tobit models. Results indicate that the digital economy significantly enhances rural households’ risk asset selection, proportion, and scale, expanding their financial market participation. Financial literacy plays a crucial mediating role, as the digital economy indirectly boosts financial risk-taking by improving financial information awareness and risk preferences. Further analysis reveals that the digital economy has a more significant impact on high-income, highly educated households, as well as households facing a digital divide. This study provides theoretical insights and practical guidance for promoting inclusive rural financial development, optimizing digital financial services, and formulating targeted policies.