Does digital finance increase household risk-taking? Evidence from China

The risk-taking behavior of economic participants has long attracted scholarly attention. Existing research focuses on the risk-taking of corporations, while studies on households are scarce. Using data from the China Household Finance Survey and the Digital Financial Inclusion Index of China, we explore the impact of digital finance on household risk-taking. We find that digital finance increases household risk-taking, and our results are robust against potential endogeneity concerns. We determine that financial literacy, financial availability, and background risk mitigation are effective mechanisms through which digital finance impacts household risk-taking. Our results imply that policymakers could shape household risk-taking with the aid of digital finance.