How do digital financial literacy, financial behavior, and skills affect financial well-being? An Exploratory Study on Gen Z
(1) Management Department Faculty of Economic and Social Sciences, Universitas Islam Negeri Sultan Syarif Kasim Riau
(2) Management Department Faculty of Economic and Social Sciences, Universitas Islam Negeri Sultan Syarif Kasim Riau
(3) Management Department Faculty of Economic and Social Sciences, Universitas Islam Negeri Sultan Syarif Kasim Riau
(*) Corresponding Author
Abstract
Rapid development in the digital financial landscape nowadays requires individuals to have sufficient financial literacy and master digital financial literacy. This study aims to analyze the direct relationship between DFL, financial behaviour, and financial skill on FWB and investigate the mediation effect of financial behaviour and skills on the relationship between DFL and FWB. Motivated by the worrying financial condition of Generation Z, this exploratory study is conducted using a self-administered questionnaire distributed in Riau Province, which resulted in 108 valid responses. A variance-based structural equation modeling using SmartPLS is utilized to test the relationship between constructs. Findings reveal that financial behavior and financial skills directly influence FWB. The evidence showed that DFL influences FWB indirectly through financial behavior. This research suggests that the government and policymakers provide knowledge about DFL to Generation Z.
Full Text:
PDFReferences
Aggarwal, S. (2014). Developing an Index for Measuring Financial Well-Being in a Geography. Dvara Research Blog. https://www.dvara.com/research/blog/2011/02/14/developing-an-index-for-measuring-financial-well-being-in-a-geography/
Agur, I., Peria, S. M., & Rochon, C. (2020). Digital Financial Services and the Pandemic: Opportunities and Risks for Emerging and Developing Economies (pp. 1–13). International Monetary Fund.
Baek, E., & De Vaney, S. A. (2004). Assessing the baby boomers’ financial wellness using financial ratios and a subjective measure. Family and Consumer Sciences Research Journal, 32(4), 321–348. Scopus. https://doi.org/10.1177/1077727X04263826
Bagozzi, R. R., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science, 16(1), 074–094.
Barbić, D. (2017, March 13). Investigating the Role of Financial Knowledge, Financial Skills and Behavioral Control in Explaining Individuals’ Successfulness in Managing Personal Finances. March 13-15, 2017 Dubai (UAE). 4th International Conference on Humanities, Social Sciences and Education (ICHSSE-17), Dubai. https://doi.org/10.15242/HEAIG.H0317436
Baron, R. M., & Kenny, D. A. (1986). The Moderator-Mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182.
BCFP. (2018). Measuring Financial Skill: A Guide to Using the Bureau of Consumer Financial Protection Financial Skill Scale. Bureau of Consumer Financial Protection. https://files.consumerfinance.gov/f/documents/bcfp_financial-well-being_measuring-financial-skill_guide.pdf
Brüggen, E. C., Hogreve, J., Holmlund, M., Kabadayi, S., & Löfgren, M. (2017). Financial well-being: A conceptualization and research agenda. Journal of Business Research, 79, 228–237. https://doi.org/10.1016/j.jbusres.2017.03.013
Bucher‐Koenen, T., Lusardi, A., Alessie, R., & van Rooij, M. (2017). How Financially Literate Are Women? An Overview and New Insights. Journal of Consumer Affairs, 51(2), 255–283. https://doi.org/10.1111/joca.12121
Byrne, B. M. (2016). Structural Equation Modelling with AMOS: Basic concepts, application, and programming (Second edition). Routledge.
CFPB. (2015a). Financial Well-Being: The Goal of Financial Education. Consumers Financial Protection Bureau.
CFPB. (2015b). Measuring Financial Well-Being: A Guide to Using the CFPB Financial Well-Being Scale. Consumers Financial Protection Bureau.
Chin, W. W., Marcolin, B. L., & Newsted, P. R. (2003). A Partial Least Squares Latent Variable Modeling Approach for Measuring Interaction Effects: Results from a Monte Carlo Simulation Study and an Electronic-Mail Emotion/Adoption Study. Information Systems Research, 14(2), 189–217. https://doi.org/10.1287/isre.14.2.189.16018
Choung, Y., Chatterjee, S., & Pak, T.-Y. (2023). Digital financial literacy and financial well-being. Finance Research Letters, 58, 104438. https://doi.org/10.1016/j.frl.2023.104438
Csiszar, J. (2023, April 4). Which Generation Is the Most (and Least) Financially Literate? Yahoo Finance. https://finance.yahoo.com/news/generation-most-least-financially-literate-150057389.html
de Bassa Scheresberg, C., & Lusardi, A. (2014). Financial Capability Among Young Adults (p. 38). NEFE Young Adults and Financial Capability Forum.
Delafrooz, N., & Paim, L. H. (2011). Determinants of financial wellness among Malaysia workers. African Journal of Business Management, 5(24), 10092. http://search.proquest.com/openview/2cf9ecd4667f18d882fa473c7d9093be/1?pq-origsite=gscholar&cbl=816394
Dimock, M. (2019). Defining generations: Where Millennials end and Generation Z begins. Pew Research Center. https://www.pewresearch.org/fact-tank/2019/01/17/where-millennials-end-and-generation-z-begins/
Drever, A. I., Odders‐White, E., Kalish, C. W., Else‐Quest, N. M., Hoagland, E. M., & Nelms, E. N. (2015). Foundations of Financial Well-Being: Insights into the Role of Executive Function, Financial Socialization, and Experience-Based Learning in Childhood and Youth. Journal of Consumer Affairs, 49(1), 13–38. https://doi.org/10.1111/joca.12068
Dushi, I., & Rupp, K. (2013). Disability Shocks Near Retirement Age and Financial Well-Being. Social Security Bulletin, 73(3), 23–43. http://search.ebscohost.com/login.aspx?direct=true&db=heh&AN=90373236&site=ehost-live
EVERFI. (2018, August 16). 4 Points about Gen Z Financial Literacy and Habits. EVERFI. https://everfi.com/blog/financial-education/how-gen-z-thinks-about-financial-literacy/
Fornell, C., & Larcker, D. F. (1981). Evaluating Structural Equation Models with Unobservable Variables and Measurement Error. Journal of Marketing Research, 18(1), 39–50.
Gold, A. H., Malhotra, A., & Segars, A. H. (2001). Knowledge Management: An Organizational Capabilities Perspective. Journal of Management Information Systems, 18(1), 185–214. https://doi.org/10.1080/07421222.2001.11045669
Gorham, E. E., DeVaney, S. A., & Bechman, J. C. (1998). Adoption of financial management practices: A program assessment. Journal of Extension, 36(2), 46–54. Scopus. https://www.scopus.com/inward/record.uri?eid=2-s2.0-3042580667&partnerID=40&md5=f8bc935766f9e1644191d6e7b2374e26
Greninger, S. A., Hampton, V. L., Kitt, K. A., & Achacoso, J. A. (1996). Ratios and benchmarks for measuring the financial well-being of families and individuals. Financial Services Review, 5(1), 57–70. http://www.sciencedirect.com/science/article/pii/S105708109690027X
Gujral, A. (2023, June 30). POV: Gen Z lacks financial literacy, but we can use their favorite digital tools to help them learn. Fast Company. https://www.fastcompany.com/90916533/gen-z-financial-literacy
Hair, J. F., Howard, M. C., & Nitzl, C. (2020). Assessing measurement model quality in PLS-SEM using confirmatory composite analysis. Journal of Business Research, 109, 101–110. https://doi.org/10.1016/j.jbusres.2019.11.069
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2017). A primer on partial least squares structural equation modeling (PLS-SEM) (Second edition). Thousand Oaks: Sage.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a Silver Bullet. Journal of Marketing Theory and Practice, 19(2), 139–152. https://doi.org/10.2753/MTP1069-6679190202
Hair, J. F., Sarstedt, M., Pieper, T. M., & Ringle, C. M. (2012). The Use of Partial Least Squares Structural Equation Modeling in Strategic Management Research: A Review of Past Practices and Recommendations for Future Applications. Long Range Planning, 45(5–6), 320–340. https://doi.org/10.1016/j.lrp.2012.09.008
Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135. https://doi.org/10.1007/s11747-014-0403-8
Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares path modeling in international marketing. In R. R. Sinkovics & P. N. Ghauri (Eds.), Advances in International Marketing (Vol. 20, pp. 277–319). Emerald Group Publishing Limited. https://doi.org/10.1108/S1474-7979(2009)0000020014
Hilgert, M. A., Hogarth, J. M., & Beverly, S. G. (2003). Household financial management: The connection between knowledge and behavior. Fed. Res. Bull., 89, 309. http://heinonlinebackup.com/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/fedred89§ion=90
Hong Shan, L., Cheah, K. S. L., & Leong, S. (2023). Leading Generation Z’s Financial Literacy Through Financial Education: Contemporary Bibliometric and Content Analysis in China. SAGE Open, 13(3), 21582440231188308. https://doi.org/10.1177/21582440231188308
Hsu, T., Tam, L., & Howell, R. T. (2017). Do You Feel Financially Secured? The Investigation of Economic Indicators and Consequences of Financial Well-Being. Atlantic Marketing Journal, 5(3), 15–34.
Huston, S. J. (2010). Measuring financial literacy. Journal of Consumer Affairs, 44(2), 296–316. http://onlinelibrary.wiley.com/doi/10.1111/j.1745-6606.2010.01170.x/full
Jhonson, B., Andriani, R., Noviana, I., & Tamara, D. (2023). The Influence of Digital Financial Literacy on Financial Well-Being through Spending, Saving, and Investment Behavior in Indonesia. Journal of Business Studies and Management Review, 6(2).
Joo, S.-H., & Grable, J. E. (2004). An exploratory framework of the determinants of financial satisfaction. Journal of Family and Economic Issues, 25(1), 25–50. Scopus. https://doi.org/10.1023/B:JEEI.0000016722.37994.9f
Kim, J., Garman, E. T., & Sorhaindo, B. (2003). Relationships among credit counseling clients’ financial wellbeing, financial behaviors, financial stressor events, and health. Journal of Financial Counseling and Planning, 14(2), 75–87. Scopus. https://www.scopus.com/inward/record.uri?eid=2-s2.0-33748333620&partnerID=40&md5=052b9f255ee6e558248cd611a0999666
Kline, R. B. (2016). Principles and Practice of Structural Equation Modeling. The Guilford Press.
Kock, N., & Lynn, G. (2012). Lateral Collinearity and Misleading Results in Variance-Based SEM: An Illustration and Recommendations. Journal of the Association for Information Systems, 13(7), 546–580. https://doi.org/10.17705/1jais.00302
Kumar, P., Pillai, R., Kumar, N., & Tabash, M. I. (2023). The interplay of skills, digital financial literacy, capability, and autonomy in financial decision making and well-being. Borsa Istanbul Review, 23(1), 169–183. https://doi.org/10.1016/j.bir.2022.09.012
Lusardi, A. (2008a). Financial Literacy: An Essential Tool for Informed Consumer Choice? (Working Paper 14048; pp. 1–30). National Bureau of Economic Research.
Lusardi, A. (2008b). Household saving behavior: The role of financial literacy, information, and financial education programs. National Bureau of Economic Research. http://www.nber.org/papers/w13824
Lusardi, A., & Mitchell, O. S. (2011). Financial literacy and retirement planning in the United States. Journal of Pension Economics & Finance, 10(4), 509–525. https://doi.org/10.1017/S147474721100045X
Lyons, A. C., & Kas-Hanna, J. (2021). A methodological overview to defining and measuring “digital” financial literacy. Financial Planning Review, 4(2). https://onlinelibrary.wiley.com/doi/epdf/10.1002/cfp2.1113
Mahdzan, N. S., Zainudin, R., Sukor, M. E. Abd., Zainir, F., & Wan Ahmad, W. M. (2019). Determinants of Subjective Financial Well-Being Across Three Different Household Income Groups in Malaysia. Social Indicators Research, 146, 699–726. https://doi.org/10.1007/s11205-019-02138-4
Mahendru, M. (2021). Financial well-being for a sustainable society: A road less travelled. Qualitative Research in Organizations and Management, 16(3/4), 572–593. https://doi.org/10.1108/QROM-03-2020-1910
Memon, M. A., Cheah, J.-H., Ramayah, T., Ting, H., & Chuah, F. (2018). Mediation Analysis: Issues and Recommendations. Journal of Applied Structural Equation Modeling, 2(1), i–ix. https://doi.org/10.47263/JASEM.2(1)01
Morgan, P. J., Huang, B., & Trinh, L. Q. (2019a). The Need to Promote Digital Financial Literacy for the Digital Age (The Future of Work and Education for the Digital Age, p. 9). T20 Japan.
Morgan, P. J., Huang, B., & Trinh, L. Q. (2019b). Why We Need to Promote Digital Financial Literacy? (p. 7) [Policy Brief]. Asian Development Bank Institute.
Mottola, G. R. (2014). The Financial Capability of Young Adults—A Generational View (FINRA Foundation Financial Capability Insights). Financial Industry Regulatory Authority.
Mugenda, O. M., Hira, T. K., & Fanslow, A. M. (1990). Assessing the causal relationship among communication, money management practices, satisfaction with financial status, and satisfaction with quality of life. Lifestyles Family and Economic Issues, 11(4), 343–360. https://doi.org/10.1007/BF00987345
Norvilitis, J. M. (2014). Changes over time in college student credit card attitudes and debt: Evidence from One campus. Journal of Consumer Affairs, 48(3), 634–647. Scopus. https://doi.org/10.1111/joca.12043
Norvilitis, J. M., Szablicki, P. B., & Wilson, S. D. (2003). Factors Influencing Levels of Credit-Card Debt in College Students. Journal of Applied Social Psychology, 33(5), 935–947. https://doi.org/10.1111/j.1559-1816.2003.tb01932.x
OECD INFE. (2011). Qore Questionnaire in Measuring Financial Literacy: Questionnaire and Guidance Notes for Conducting an Internationally Comparable Survey of Financial Literacy. Paris: OECD.
O’Neill, B., Sorhaindo, B., Xiao, J. J., & Garman, E. T. (2005). Financially distressed consumers: Their financial practices, financial well-being, and health. Journal of Financial Counseling and Planning, 16(1), 73–87. Scopus. https://www.scopus.com/inward/record.uri?eid=2-s2.0-76349126215&partnerID=40&md5=51827d193bfb515e8b65aa35e3e8c5f6
Owusu, G. M. Y., Koomson, T. A. A., Boateng, A. A., & Donkor, G. N. A. (2023). The nexus amongst financial literacy, financial behaviour and financial well-being of professional footballers in Ghana. Managing Sport and Leisure. Scopus. https://doi.org/10.1080/23750472.2023.2248150
Porter, N. M., & Garman, E. T. (1993). Testing a Conceptual Model of Financial Well-Being. Financial Counseling and Planning, 4, 31.
Prasad, H., Meghwal, D., & Dayama, V. (2018). Digital Financial Literacy: A Study of Households of Udaipur. Journal of Business and Management, 5, 23–32. https://doi.org/10.3126/jbm.v5i0.27385
Prawitz, A. D., Garman, E. T., Sorhaindo, B., O’Neill, B., Kim, J., & Drentea, P. (2006). In Charge financial distress/financial well-being scale: Development, administration, and score interpretation. Financial Counselling and Planning, 17(1), 34–50. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2239338
Preacher, K. J., & Hayes, A. F. (2004). SPSS and SAS procedures for estimating indirect effects in simple mediation models. Behavior Research Methods, Instruments, & Computers, 36(4), 717–731. https://doi.org/10.3758/BF03206553
Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40(3), 879–891. https://doi.org/10.3758/BRM.40.3.879
Respati, D. K., Widyastuti, U., Nuryati, T., Musyaffi, A. M., Handayani, B. D., & Ali, N. R. (2023). How do students’ digital financial literacy and financial confidence influence their financial behavior and financial well-being? Nurture, 17(2), 40–50. https://doi.org/10.55951/nurture.v17i2.154
Reynolds, A. J., Temple, J. A., Ou, S.-R., Robertson, D. L., Mersky, J. P., Topitzes, J. W., & Niles, M. D. (2007). Effects of a School-Based, Early Childhood Intervention on Adult Health and Well-being: A 19-Year Follow-up of Low-Income Families. Archives of Pediatrics & Adolescent Medicine, 161(8), 730–739. https://doi.org/10.1001/archpedi.161.8.730
Ringle, C. M., Sarstedt, M., Mitchell, R., & Gudergan, S. P. (2020). Partial least squares structural equation modeling in HRM research. The International Journal of Human Resource Management, 31(12), 1617–1643. https://doi.org/10.1080/09585192.2017.1416655
Ringle, C. M., Wende, S., & Becker, J.-M. (2022). SmartPLS 4 [Computer software]. Oststeinbek: SmartPLS GmbH. http://www.smartpls.com
Rungtusanatham, M., Miller, J. W., & Boyer, K. K. (2014). Theorizing, testing, and concluding for mediation in SCM research: Tutorial and procedural recommendations. Journal of Operations Management, 32(3), 99–113. https://doi.org/10.1016/j.jom.2014.01.002
Rutherford, L. G., & Fox, W. S. (2010). Financial Wellness of Young Adults Age 18–30. Family & Consumer Sciences Research Journal, 38(4), 468–484. https://doi.org/10.1111/j.1552-3934.2010.00039.x
Serido, J., Shim, S., & Tang, C. (2013). A developmental model of financial capability: A framework for promoting a successful transition to adulthood. International Journal of Behavioral Development, 37(4), 287–297. https://doi.org/10.1177/0165025413479476
Setiawan, M., Effendi, N., Santoso, T., Dewi, V. I., & Sapulette, M. S. (2020). Digital Financial Literacy, Current Behavior of Saving and Spending and Its Future Foresight. Economics of Innovation and New Technology, 1–19. https://doi.org/10.1080/10438599.2020.1799142
Shim, S., Xiao, J. J., Barber, B. L., & Lyons, A. C. (2009). Pathways to life success: A conceptual model of financial well-being for young adults. Journal of Applied Developmental Psychology, 30(6), 708–723. http://www.sciencedirect.com/science/article/pii/S0193397309000082
Singh, D., & Malik, G. (2022). A systematic and bibliometric review of the financial well-being: Advancements in the current status and future research agenda. International Journal of Bank Marketing, ahead-of-print(ahead-of-print). https://doi.org/10.1108/IJBM-06-2021-0238
Sorgente, A., & Lanz, M. (2017). Emerging Adults’ Financial Well-being: A Scoping Review. Adolescent Research Review, 2(4), 255–292. https://doi.org/10.1007/s40894-016-0052-x
Tay, L., Batz, C., Parrigon, S., & Kuykendall, L. (2017). Debt and Subjective Well-being: The Other Side of the Income-Happiness Coin. Journal of Happiness Studies, 18(3), 903–937. Scopus. https://doi.org/10.1007/s10902-016-9758-5
Tezel, Z. (2015). Financial Education for Children and Youth. https://www.igi-global.com/chapter/financial-education-for-children-and-youth/128621
Tony, N., & Desai, K. (2020). Impact Of Digital Financial Literacy On Digital Financial Inclusion. International Journal of Scientific & Technology Research, 9(01), 1911–1915.
UKFinance. (n.d.). Gen Z more likely to be tricked by criminals and fall for impersonation scams. UK Finance. Retrieved 26 October 2023, from https://www.ukfinance.org.uk/news-and-insight/press-release/gen-z-more-likely-be-tricked-criminals-and-fall-impersonation-scams
Vlaev, I., & Elliott, A. (2014). Financial Well-Being Components. Social Indicators Research, 118(3), 1103–1123. https://doi.org/10.1007/s11205-013-0462-0
Vosloo, W., Fouche, J., & Barnard, J. (2014). The Relationship Between Financial Efficacy, Satisfaction With Remuneration And Personal Financial Well-Being. International Business & Economics Research Journal (IBER), 13(6), 1455–1470. https://doi.org/10.19030/iber.v13i6.8934
Walker, J. T., & Bocian, D. G. (2018). Understanding the Pahways to Financial Well-Being (2). Bureau of Consumer Financial Protection.
Xiao, J. J. (2008). Applying behavior theories to financial behavior. In Handbook of consumer finance research (pp. 69–81). Springer. http://link.springer.com/chapter/10.1007/978-0-387-75734-6_5
Xiao, J. J., & O’Neill, B. (2018). Propensity to plan, financial capability, and financial satisfaction. International Journal of Consumer Studies, 42(5), 501–512. Scopus. https://doi.org/10.1111/ijcs.12461
Xiao, J. J., Tang, C., & Shim, S. (2009). Acting for happiness: Financial behavior and life satisfaction of college students. Social Indicators Research, 92(1), 53–68. http://link.springer.com/article/10.1007/s11205-008-9288-6
Xue, R., Gepp, A., O’Neill, T. J., Stern, S., & Vanstone, B. J. (2019). Financial well-being amongst elderly Australians: The role of consumption patterns and financial literacy. Accounting & Finance, 60(4), 4361–4386. https://doi.org/10.1111/acfi.12545
Yadav, M., & Banerji, P. (2023). A bibliometric analysis of digital financial literacy. American Journal of Business, 38(3), 91–111. https://doi.org/10.1108/AJB-11-2022-0186
Zhang, Y., & Chatterjee, S. (2023). Financial Well-Being in the United States: The Roles of Financial Literacy and Financial Stress. Sustainability, 15(5), 4505. https://doi.org/10.3390/su15054505
DOI: http://dx.doi.org/10.33019/ijbe.v8i1.851
Article Metrics
Abstract view : 577 timesPDF - 317 times
Refbacks
- There are currently no refbacks.
![Creative Commons License](http://i.creativecommons.org/l/by/4.0/88x31.png)
This work is licensed under a Creative Commons Attribution 4.0 International License.
Integrated Journal of Business and Economics is licensed under a Creative Commons Attribution 4.0 International License.
![](/public/site/images/echopk/IJBE_Footer1.gif)