Household financial asset allocation remains a key issue in personal finance. According to the 2023 U.S. Survey of Consumer Finances, over 40% of American households’ financial assets are invested in stocks and mutual funds, while bank deposits make up only 17%. In contrast, Chinese households hold 62% of their assets in cash and deposits, with insurance, stocks, funds, and bonds accounting for 12.2%, 9.4%, 3.4%, and 0.5%, respectively. This suggests limited participation in high-risk investments and a highly concentrated asset structure in China, which constrains return growth. Effective asset allocation contributes to achieving stable returns and effectively managing financial risks (Li and Qian, 2021), making it crucial for improving household welfare and supporting financial market stability (Sun and Li, 2025).

The digital divide affects residents’ wealth accumulation, particularly through urban-rural disparities in investment returns (Yuan et al., 2023). Households lacking digital skills face limited access to high-yield investments (Guo and Guo, 2025), potentially widening income inequality (Michelangeli and Viviano, 2024). Digital literacy is essential for economic participation in employment, consumption, and investment amid rapid digital advancement (Ma and Cao, 2025). It helps reduce the digital divide and boosts household engagement in financial markets, significantly influencing asset allocation (Wang et al., 2023).

Existing literature has examined factors influencing the effectiveness of household financial asset portfolios from both micro and macro perspectives. Micro-level factors include demographic characteristics (Grinblatt et al., 2011), housing assets (Pelizzon and Weber, 2009), and financial literacy (Lusardi and Mitchell, 2014); macro-level factors encompass policy uncertainty (Sun and Li, 2025) and digital financial inclusion (Wu et al., 2021). However, little attention has been paid to the impact of digital literacy on household financial portfolio effectiveness. This study uses the China Household Finance Survey (CHFS) data from 2017 and 2019 to create a balanced panel dataset and examines how digital literacy affects household financial asset allocation, including its underlying mechanisms. The research contributes to the literature in three ways: First, it expands digital literacy research from the domains of education and artificial intelligence into household finance; second, it analyzes how the impact of digital literacy on the effectiveness of asset portfolios varies with financial literacy and age; third, it identifies attention to financial information and risk attitude as two important mechanisms, offering policy insights for enhancing household economic well-being in the digital era.

Source link