Financial Literacy And Poverty Due To Illness

The actual need for medical expenditure due to illness makes it one of the most important factors for poverty in our country,which is the key point in the course of domestic poverty alleviation.In recent years,as financial products become increasingly rich and financial market fluctuates more tempestuously,it has higher requirements for financial consumers to participate in these markets.Therefore,it is great of significance for preventing group close to poverty returning to poverty and promoting sustainable development of financial institutions to study the relationship between household financial literacy and poverty due to illness,because it can help formulating targeted policies to improve resident financial literacy,guiding people to make great use of financial resource reasonably and raising financial industry standards which can improve household family’s 1financial decision and meet their demand of consumption smoothing aiming to enhance their risk resistance ability and social survival ability.Based on theories related to family finance,our study sorted out the definition of financial literacy and relevant literature on the impact of its economic consequences.Combined with existing research literature on poverty reduction,this study proposed that financial literacy could reduce the possibility of families poverty due to illness,and further explored the influence channels.In empirical aspect,this article employ the The questionnaire of China Household Finance Survey(CHFS),using Probit regression model,and using instrumental variable alleviate the endogenous problem of financial literacy.After further analysis examined the heterogeneity and trying to expand the analysis of the impact mechanism of financial literacy on family poverty due to illness,the empirical results show that:(1)Family financial literacy had a significant positive impact on reducing the likelihood that family poverty due to illness;(3)The mechanism of financial literacy reducing the possibility of family poverty due to illness was that financial literacy could promote the growth of family income,improve the level of medical security and improve the family risk management ability;(2)There was regional heterogeneity in the benchmark model,and the effect was more significant in urban,middle and east area.Finally,based on the above empirical results,the following suggestions are as follow:(1)Household Financial consumers should emphasis the improvement of their own financial literacy,and rationally arrange the use of financial instruments considering their own background,so as to improve the family’s resistance in front of the risk;(2)The design of financial product by financial institutions should take account of real needs of users and the layout of institutions’ setting should be adapted to local conditions.(3)Government regulatory departments should improve domestic poverty standard system,expand the scope of serious medical insurance,encourage loans through formal channels,and strengthen investment in financial infrastructure and services in rural and western regions.