Does financial literacy contribute to facilitating residents in safeguarding their rights as financial consumers?A three-stage study based on the perspective of “fraud” phenomenon

Utilizing microdata from six provinces in East China, this study centers on the phenomenon of "fraud," employing a three-stage Probit model with dual sample selectivity to explore the impact of financial knowledge on residents' safeguarding of financial consumer rights and interests. This methodological approach effectively addresses estimation bias arising from concerns related to dual sample selectivity. The process of residents safeguarding their rights and interests when confronted with fraud unfolds in three sequential stages: "preventing fraud preemptively - mitigating losses post-fraud occurrence - pursuing rights protection subsequent to incurring losses." Key findings indicate that, on the whole, higher levels of financial knowledge foster residents' protection of financial consumer rights and interests. Specifically, heightened financial literacy is associated with an increased likelihood of encountering fraud, a reduced probability of incurring losses post-fraud, and an enhanced propensity for pursuing rights protection thereafter. Moreover, heterogeneity analysis reveals that the impact of financial knowledge is more pronounced among middle-aged and elderly individuals, rural inhabitants, and women. Furthermore, concerning various types of fraud, the amplification effect of financial knowledge is particularly evident in cases of telecom fraud and online fraud, though not in traditional fraud cases. Additionally, moderation effect analysis underscores that, overall, heightened attention to information, improved digital literacy, and increased social interaction can reinforce the positive influence of financial knowledge. This paper provides valuable insights for strengthening the protection of residents' financial rights and ensuring the security of their assets.