Are Digital Skills and Financial Knowledge Complementary? Evidence from Older Households’ Asset Allocation in China

Abstract

Data from the 2019 and 2021 waves of the China Household Finance Survey were used to examine whether digital skills and financial knowledge jointly shape financial asset diversification among Chinese households headed by adults aged 60 years or older. Digital skills were measured by smartphone use and third-party mobile-payment-account adoption, financial knowledge by correct responses to interest-rate and inflation questions, and capability complementarity by the interaction between the two standardized indices. Pooled ordinary least squares models with province and year fixed effects, temporal-prediction specifications, inverse-probability weighting, and alternative measurement and sample checks were estimated. Digital skills, financial knowledge, and their interaction were positively associated with diversification. In the preferred specification, the corresponding coefficients were 0.0134, 0.0118, and 0.0167, respectively, and all were significant at the 1% level. Capability complementarity was concentrated in broader portfolio scope: dual-enablement households were more likely to form multi-asset portfolios and less likely to hold only cash and bank deposits, with significant super additive increments. The association was stronger among households willing to accept some risk and weaker among households residing in rural areas whose heads held agricultural hukou status. The findings indicate that digital operational competence and financial judgment function as complementary capabilities and support integrating digital-skills training with financial education for older adults.