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Financial literacy, confidence and well-being: The mediating role of financial behavior

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  • Sajid, Muhammad
  • Mushtaq, Rizwan
  • Murtaza, Ghulam
  • Yahiaoui, Dorra
  • Pereira, Vijay

Abstract

This study aims to investigate the impact of financial literacy and confidence on the financial well-being of US households and to explore the mediating role of financial behaviors in this relationship. To do this, we analyzed a large dataset from the two most recent waves of the state-by-state National Financial Capability Study (NFCS), covering a representative sample of US adults (n = 43,104). Results from multiple regression and mediation analyses, adjusted for relevant controls, show that financial literacy influences financial well-being directly and indirectly (mediated) through financial behaviors. Our analyses further indicate that financial confidence has a positive impact, directly and indirectly through financial behaviors, on financial well-being. Overall, our results suggest that higher levels of financial literacy and confidence lead to more responsible financial behavior, which, in turn, influences financial well-being. The findings of this study provide a valuable addition to the literature and directions for future research.

Suggested Citation

  • Sajid, Muhammad & Mushtaq, Rizwan & Murtaza, Ghulam & Yahiaoui, Dorra & Pereira, Vijay, 2024. "Financial literacy, confidence and well-being: The mediating role of financial behavior," Journal of Business Research, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:jbrese:v:182:y:2024:i:c:s0148296324002959
    DOI: 10.1016/j.jbusres.2024.114791
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    More about this item

    Keywords

    Financial literacy; Financial well-being; Confidence; Behaviors; Household finance;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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