Abstract: Based on the data of 2015 China Household Finance Survey （CHFS）, this paper employs Probit model and instrumental variable analysis to investigate the impact of financial knowledge on rural households' Internet financial participation behavior. Through theoretical analysis and empirical test, it is found that financial knowledge can significantly promote the participation of rural households in Internet finance, however, heterogeneity exists between different age groups. Among them, the Internet financing behavior of the youth group and the Internet investment behavior of the middle-aged group were most significantly affected by financial knowledge, while the Internet investment and financing behavior of the elderly group was not significantly affected by financial knowledge. Therefore, it is of great necessity to strengthen financial literacy in rural areas, step up the innovation in Internet financial products, and strengthen the defense line of Internet financial risks to ensure that rural households can participate in Internet finance more rationally and which, in turn, can better serve the rural economy.

Key words: Financial Knowledge, Rural Households, Internet Finance, Internet Investment and Financing, Inclusive Finance, Financial Risk, Financial Product Innovation, Rural Financial Reform