Social Interaction, Financial Literacy, and Household Financial Fragility

Abstract

With the rapid development of digitalization, social interaction is becoming more and more frequent and complex, and the problem of household financial fragility is becoming more and more prominent, which brings challenges to macro financial stability. In order to explore the relationship between social interaction and household financial vulnerability, Based on the data of China Family Panel Studies(CFPS) 2018, this paper constructs an index system of social interaction, financial literacy and household financial fragility, discusses the influence mechanism of social interaction on household financial fragility, and clarifies the mechanism of social interaction affecting household financial fragility through financial literacy. The results show that social interaction significantly alleviates household financial fragility; social interaction alleviates household financial fragility by improving financial literacy ; this impact mainly exists in subgroups with higher financial literacy, urban and Internet-using households. Therefore, household financial fragility can be alleviated by improving social interaction conditions and narrowing the financial literacy gap.