Assessing the Financial Health of Female-Headed Households: An Empirical Study in China

Background and Objective: The global trend of financialization has introduced significant risks and uncertainties, exacerbated by the outbreak of the COVID-19 pandemic, which has affected the economic and financial conditions of various groups. This scenario underscores the criticality of financial health. While existing research indicate that women generally exhibit lower levels of financial literacy and tend to have less access to financial resources compared to men, empirical research on gender disparity in financial health is still limited. This study aims to bridge this gap by analyzing gender differences in household financial health, using nationally representative household data from China.

Methods: The study used cross-sectional data from the China Household Finance Survey Project (CHFS2019), which includes information on 107,001 residents from 34,643 households. We selected household heads aged between 16 and 80 years (N=33,463). To mitigate selection bias, we applied three matching methods (i.e., nearest neighbor one-to-two matching, radius matching, and kernel matching) to pair male and female-headed households. Household financial health is measured by three variables on a balance of income and expenditure (Yes/No), ownership of commercial insurance (Yes/No), and the number of investment products held. A series of demographic and socioeconomic characteristics (e.g., age, education, employment, and so on) are used to match male and female household heads. We then applied logistic regression to assess the association between the gender of the household head and household financial health.

Results: The propensity score matching results confirmed characteristic balance between the female- and male-headed groups. Contrary to prevalent beliefs, the findings reveal that female-headed households have a better balance of income and expenditure than male-headed households (β =0.173, p < .001, reference = female). Moreover, female-headed households are more likely to possess commercial insurance (β =0.433, p < .001) and investment products than male-headed households (β =0.082, p < .05).

Discussion: Female-headed households display better financial balance, indicating greater stability and sustainability in financial performance. This suggests that, after controlling for demographic and socioeconomic characteristics, women may possess more effective financial management skills than man in handling daily expenses and savings. In addition, female household heads are more likely to invest in commercial insurance as a means to manage household risks, indicating a greater inclination towards risk protection. Furthermore, female-headed households possess more financial investment products, indicating that their financial access is comparable to that of men. Considering that women manage the day-to-day household consumption and have financial outperformance, household finance-related policies and programs (such as asset-building policies, Children's Development Accounts) may be more effective if targeted towards women in households. Lastly, advocating for gender equality and empowering women in economic decision-making within the household through social activities will not only enhance women's status within the household and promote gender equality in society but also contribute to improving the financial health of households.