A Study on Financial Literacy and Its Influencing Factors
of Chinese Young Students:
Based on the Survey of Hainan and Guangdong Provinces

By: Ruohe Yang 19154  Shenzhen College of International Education

1. Introduction

Financial literacy is one of the necessary qualities for modern citizens to adapt to the increasingly complex economic world. Since China’s Reform and Opening Up policy was enacted 40 years ago, economic development has become the paramount focus of the country. Consequently, because of the citizens’ increasingly complex day to day economic experience, financial literacy becomes a necessary skill for any citizen to have . It is especially necessary for the young students—backbones of the society—to  have high levels of financial literacy, hence helping to promote the in-depth development of inclusive finance, safeguarding the long-term and fundamental interests of financial consumers, and contributing to the stability of financial markets.

On the basis of existing research with adaptations for the actual characteristics of Chinese young students, this paper constructs a financial literacy evaluation framework for Chinese young students. This study takes the high school students and college students in Hainan and Guangdong provinces as the survey objects, evaluates their financial literacy level and its influencing factors, and provides a reference for the education sector and government to carry out financial literacy education.

2. Literature Review and Evaluation Framework Construction

Since proposed in 1992 (Noctor et al., 1992), the concept of financial literacy has been defined several times but not unanimously accepted (Huston, 2010). The 2008 General Advisory Council on Financial Literacy (PACFL) identified financial literacy as an individual’s ability to employ the knowledge and skills to effectively manage his financial resources for the lifelong financial well-being. In 2011, the British Columbia Securities Commission (BCSC) incorporated a psychological perspective and pointed out that financial literacy means having the knowledge, skills and confidence to make informed and sound financial decisions. Xin Ziqiang (2018) processed the research literature on financial literacy over the past 30 years, integrated the view of human nature in economics and psychology, and proposed the ternary theory of financial literacy, including financial knowledge, financial ability and financial values.

At present, the assessment framework designed for young students’ financial literacy is PISA (Program for International Student Assessment), developed by OECD in 2000, which focuses on the basic financial knowledge and learning ability, which mainly reflects the result of education for knowledge. In 2011, BCSC carried out the initial study on the financial life skills of Canadian teenagers from the aspects of attitude, behavior and knowledge, which scientifically combined external performance (behavior) and internal cognition (attitude and knowledge).

Based on previous studies, this paper defines financial literacy as the combination of financial knowledge, financial attitude and financial behavior. Based on the framework of BCSC and the actual characteristics of Chinese young students, this paper constructs a framework designed for Chinese young students.

Attitudes – QuestionsScoring Criteria
Do you think it is important to learn financial knowledge in high school?Yes =1 point; No =0 point
Do you support the establishment of financial education system in school?Yes =1 point; No =0 point
Do you think it is important to set up an individual savings account?Yes =1 point; No =0 point
Do you know where to learn about investing and personal financial management?Yes =1 point; No =0 point
Do you think it is important to write a personal financial plan?Yes =1 point; No =0 point
Do you think the lack of financial knowledge will cause inconvenience to your life?Yes =1 point; No =0 point
Assessment Framework of Chinese young students’ financial literacy
Behaviors – QuestionsScoring Criteria
Do you keep recording your income and expenditure?Yes =1 point; No =0 point
Do you write financial plans?Yes =1 point; No =0 point
Do you know your personal income and expenses last month?Yes =1 point; No =0 point
Have you ever shared a financial password or verification code with any other?Yes =1 point; No =0 point
Have you ever been a victim of personal information fraud or ID theft?Yes =1 point; No =0 point
Do you know about the interest rates of your personal bank account (current deposit rate and fixed rate)?Yes =1 point; No =0 point
Have you tried other personal financial services at your personal bank?Yes =1 point; No =0 point
Assessment Framework of Chinese young students’ financial literacy
Knowledge – QuestionsScoring Criteria
Have you ever taken a basic financial literacy test and your final score was?Excellent =1point; Good =1 point; Qualified =1 point; Unqualified =0 point; Never participated =0 point
As a student, which of the following personal financial knowledge have you ever learned?No more than 3 kinds=0 point; More than 3 kinds=1 point
Assessment Framework of Chinese young students’ financial literacy

3. Data and Statistical Methods

3.1 Sample Source Characteristics

The data in this paper are from an online survey conducted in September 2022 among the high school and college students in Hainan province and Guangdong province, respectively. The survey adopted stratified random sampling method, that is, taking the province as the primary sampling unit, randomly selecting a city in Hainan and Guangdong province, randomly selecting a high school or university in each city, and then randomly selecting students in each high school or university to conduct a questionnaire survey. A total of 4000 questionnaires were distributed and 3280 valid questionnaires were collected, of which 1976 were from Hainan and 1304 were from Guangdong. The basic information of valid samples is shown in Table 2.

OptionSample size
Education backgroundHigh school1289
Education backgroundUndergraduate1991
Table 2. Basic information of valid samples

Table 2. Basic information of valid samples

3.2 Statistical Methods

SPSS 14.0 software was used for data processing in this questionnaire survey. Data were input first, and then invalid questionnaires (answering for too much time, failure to answer as required, Unrealistic answers, etc.) were eliminated; Finally, frequency analysis and description analysis are used to analyze the data.

4. Questionnaire Results and Preliminary Analysis

Based on the questionnaire results, we have summarized and analyzed the overall financial literacy levels (including attitudes, behaviors, and knowledge), family background, and in-school financial education of the surveyed high school and college students. Further, we have explored whether in-school financial education and the extent of financial education received by parents could have an impact on the financial literacy levels of young students.

4.1 Expectations of Future Financial Position

In general, young Chinese students are optimistic about their future financial situation:

  1. 75.88% believe their future financial situation will be better compared to that of their parents;
  2. 53.32% believe their annual salary will exceed RMB 100,000 after graduation;
  3. 58.35% believe they can afford to purchase a real estate within 10 years.

4.2 Use of Savings and Forms of Assets

The savings of young Chinese students primarily cater for educational expenses, followed by leisure and vacation:

  1. 44.66% of the surveyed students mainly use savings for educational expenses, 34.18% for leisure and vacation, and 21.16% for emergencies.
  2. The main forms of assets held by the surveyed students include deposits (71.52%), funds (10.37%) and real estate (13.17%).

4.3 Comprehensive Financial Literacy Level

(1) Attitudes

The majority of young Chinese students recognize the importance and value of having financial literacy:

  1. 84.42% of them consider it important to learn financial literacy education at the high school level.
  2. In terms of access to relevant knowledge, only 54.21% of them are aware of where to seek knowledge about investment and personal financial management.

(2) Behaviors

When it comes to financial behaviors, most of the young students are yet to developed good financial manners:

  1. 54.45% of the surveyed students keep records of their income and expenses;
  2. Only 1 out of 3 students have a clear financial plan;
  3. A small percentage of the surveyed students (28.15%) do not even keep track of their income and expenses for the previous month.

In addition, some students are barely aware about financial security:

  1. 19.05% of them have once shared their financial passwords or PINs with others
  2. 22.56% have been victims of personal information fraud or ID theft.

For personal banking, only 36.55% of the students know the interest rate of their personal bank accounts, and 21.1% have tried other personal financial services.

(3) Knowledge

Overall, young students’ financial literacy is relatively weak:

  1. 9.21% of students are not knowledgeable about any of the listed personal financial knowledge.
  2. Only half of the respondents know about personal savings, one third know about fraud, and just under one third know about personal investments (27.71%), financial planning (26.16%); budgeting (25.00%). In essence, only 4.45% have the requisite personal financial knowledge.

In terms of financial literacy assessment, only 17.96% of the students have undertaken one of the basic financial quality tests. A total of 176 students who took part in the test achieved excellent grades, 240 students achieved good grades, 162 students passed, and 11 students failed.

(4) Overall Score of Financial Literacy Level

The scoring criteria in this report are primarily based on the aforementioned financial literacy assessment framework for young Chinese students. Three components of respondents’ attitudes, behaviors, and knowledge are scored separately. The scores are then averaged to obtain the overall score of the students’ financial literacy level by applying the following formula:

Composite score = (Attitude score + Behavior score + Knowledge score)/3 *100

The attitude score is equal to the sum of the scores of the questions in the attitude section divided by the number of questions, with the final score ranging between 0 and 1. The behavior and knowledge scores are calculated in a similar manner.

The distribution of the overall score of this assessment is shown in Figure 1, and it indicates that the financial literacy level of young Chinese students is relatively low, with an average score of 51.45 and a median score of 47.62. The number of students who failed (below 60 points) accounts for two-thirds of the total, and only 5% of them achieved excellent scores.

Figure 1. Overall financial literacy score of the sample

Note: In the comprehensive assessment, a total score of less than 60 is graded as “Fail”, 60-70 as “Pass”, 70-90 as “good”, 90-100 as “Excellent”.

Source: Questionnaire results, self-drawn by the author.

4.4 In-school Financial Education

From the information provided, only a quarter of the students have undertaken a personal finance-related course:

  1. The majority (86.14%) believe that the course is valuable;
  2. A similar percentage (84.64%) opines that the finance course has helped them manage their finances.

Furthermore, it is clear that there is a high demand for finance education at the high school level:

  1. About 77.16% of the surveyed students agree that finance-related education should be added to the high school curriculum;
  2. Only 6.83% of the surveyed students consider the financial quality education they received to be highly comprehensive.

4.5 Impact of On-campus Financial Education

On-campus financial education may improve the overall financial literacy level of students. As shown in Figure 2, the surveyed students are divided into two categories based on whether they have undertaken personal finance courses or not. It can be observed that personal finance courses could significantly reduce the proportion of the population with low financial literacy levels and increase the proportion of those with good and excellent financial literacy levels.

Figure 2. Impact of on-campus financial education on students’ overall financial literacy

Source: Questionnaire results, self-drawn by the author.

4.6 Influence of Parents

Although more than half of the young students’ parents have not received financial education, two-thirds of the parents agree on the importance of financial education. Among the respondents, 44.76% have both parents who have received financial literacy education, 16.28% have one parent who has received financial literacy education, and 38.96% have neither parent who has received financial literacy education. What is clear is that nearly two-thirds of the parents support their students to learn financial literacy education in high school or even earlier.

Whether the parents have taken financial education or not?Sample size
Both have534
Either have535
Neither have1278
Not sure933
Table 3. The financial education level of the sampled families
Whether the parents support introducing financial education in high school or not?Sample size
Table 3. The financial education level of the sampled families

 Table 3. The financial education level of the sampled families

Normally, parents who have received financial education may pass on knowledge to their children and increase their children’s financial literacy levels. We have studied the effect of parents having received financial education or not on their children’s financial literacy levels, and it can be concluded that children of parents who have received financial education are less likely to fall into financial illiteracy and also highly likely to have exceptional financial literacy levels, and vice versa.

Figure 3. Effect of parents’ financial education on children’s overall financial literacy

Source: Questionnaire results, self-drawn by the author

Looking at the data related to the sources of financial literacy among the surveyed students, 58.57% of the students indicated that their financial literacy knowledge comes from their families, followed by friends (37.5%) and schools (37.07%). We speculate that family members who have received financial education may have passed on financial knowledge to their children, which in turn improves their financial literacy levels.

5. Conclusions and Recommendations

This study has empirically investigated the level of financial literacy among young students in Hainan and Guangdong provinces in China and explored the possible factors influencing it.

It has been observed that young Chinese students are relatively optimistic regarding their future financial situations, and that nearly half of them make savings to cover educational expenses. Additionally, young students recognize the value of having financial literacy, but most are less financially literate and have not yet developed good financial behaviors. Overall, nearly 2/3 of them failed in financial literacy tests, with only 5% excelling in the tests.

In-school financial education has been ascertained to significantly reduce financial illiteracy and improve the overall financial literacy levels of young students. Meanwhile, students are demanding for the introduction of a more comprehensive in-school financial education in the curriculum. In parallel, financial education for parents has also been found to improve the financial literacy of their children.

In conclusion, based on the study results, we would like to call on the government and educators to introduce financial literacy education in schools as early as possible to enrich students’ financial literacy knowledge and guide them to develop good financial habits. At the same time, we suggest that parents should seek financial education themselves and teach their children by example in their daily financial life, so as to enhance their children’s financial literacy in a subtle way.


[1] Noctor, M., S. Stoney, and R. Stradling, 1992, Financial Literacy, A report prepared for the National Westminster Bank.
[2] Huston, S. J., 2010, Measuring Financial Literacy, Journal of Consumer Affairs, 44(2): 296-316.
[3] ZQ Xin, HC Zhang, BELL Sun, YH Yu, ZY Xin., 2018, The connotation and triadic structure of financial literacy, Psychological Techniques and Applications, 6(8): 450-458.
[4] British Columbia Securities Commission, 2011, National Report Card on Youth Financial Literacy.