Does financial education help to improve the return on stock investment? Evidence from China

Individual investors are important capital market participants, and improving their financial welfare has been a long-standing objective for policymakers and researchers. Using the data from a national survey on individual investor behavior in China, we explore the relationship between individual investors' financial education attainment and the performance of their stock portfolios. The results show that individual investors who receive financial education are more likely to increase their profits in the stock market because they have good investment habits and elevate theirare more risk tolerant. Further, financial education demonstrates a greater effect on stock market profit making among investors with less experienced and from areas with lower levels of investor protection.

Automated summary

Individual investors play an important role in the capital market, and improving their financial welfare has always been a long-standing goal for policymakers and researchers. Using data from a national survey on individual investor behavior in China, we examine the relationship between individual investors’ financial education and the performance of their stock portfolios. The results suggest that individual investors who receive financial education are more likely to increase their profits in the stock market due to their good investment habits and higher risk tolerance. Additionally, financial education has a stronger impact on stock market profit making for less experienced investors and those from regions with lower levels of investor protection.