Digital financial literacy and household consumption: Total expenditure versus consumption structure in China

Using data from the China Household Finance Survey, this study examines how digital financial literacy relates to household consumption. Digital financial literacy is positively associated with total consumption expenditure, especially among low-income households. Borrowing is the main pathway linking digital financial literacy to consumption, while investment and insurance play smaller roles. In contrast, the evidence for a systematic shift in the full consumption structure is not robust. The study suggests that digital financial literacy programmes can serve as an effective demand-side tool for household consumption, especially for low-income groups, but achieving structural changes in consumption likely requires complementary policies in education, health, and culture. Facilitating responsible digital credit access and building trust in digital insurance products are important for the link between digital financial literacy and higher household consumption.