How does Internet Financial Product Participation Matter for Household Financial Vulnerability? Evidence from China

Internet finance is a prominent sector within the digital finance industry, presenting both opportunities and challenges for individual investors and financial institutions. Using data from the China Household Finance Survey in 2015, 2017, and 2019, this study constructs a three-year balanced panel to empirically analyze the impact of participation in internet financial products on household financial vulnerability. An intermediary effect model is employed to examine the underlying mechanisms. Additionally, regional and age heterogeneity are explored. The study found that internet finance not only significantly reduces household financial vulnerability but also enhances financial distress by improving participants’ financial literacy and capacity. Additionally, participation in internet financial products affects users’ risk attitudes and economic behaviors, increasing their level of concern for the economy, boosting their investment confidence, and improving their investment performance in other financial activities, thereby mitigating household financial vulnerability.