Financial literacy as a mediator of personal financial health during COVID-19: a structural equation modelling approach

Swati Anand · Kushendra Mishra · Vishal Verma · Taruna Taruna

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Financial Literacy, Pension, Retirement Analysis COVID-19 Pandemic Impacts Financial Literacy and Behavior

Abstract

The coronavirus disease 2019 (COVID-19) pandemic has become a global humanitarian challenge. This scourge has impacted people from all walks of life as well as every economic sector and activity, from travel to automotives, hotels to banking, and supply chain to retail. The pandemic has affected not only physical and mental health but also financial health. Studies have examined the pandemic's economic impact, but very few have examined its impact on personal finances. Efforts to contain the pandemic's spread, such as lockdowns, have resulted in suspended business operations throughout the world that have intensified joblessness. To prepare and protect people from such unforeseen situations, financial education and planning are necessary. We attempt to expand the evidence on this issue by applying a structural equation modelling approach to identify the mediating role of financial literacy programs in preparing and protecting household wealth against sudden worldwide setbacks. The research design is descriptive and exploratory using snowball sampling technique. The data was collected through an internet survey. In total, 400 survey responses were obtained. After testing the measurement model for key validity dimensions, the hypothesised causal relationships are examined in several path models. The results indicated that coronavirus awareness exerts a direct or indirect influence on the financial health of individuals through financial literacy. We conclude that financial literacy has a full mediating effect on the personal finance of individuals during the COVID-19 pandemic. The findings not only contributed to the need and understanding of financial literacy but also have managerial implications. Financial literacy programs provide investment advice and suggestions which are actionable and also work to help individuals to come out stronger in terms of knowledge and skill set when the COVID-19 crisis passes.

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2014Earlier financial literacy and later financial behaviour of college students 2001The HIV/AIDS pandemic in South Africa: sectoral impacts and unemployment 2016Disease Control Priorities, Third Edition (Volume 4): Mental, Neurological, and Substance Use Disorders 2020Financial literacy in the COVID-19 pandemic: pressure conditions in Indonesia 2016Consumer Financial Capability and Wellbeing 2016The Impact of Financial Literacy on Student Teachers’ Saving Intention and Saving Behaviour

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