PurposeThe present study examines the linkage between financial literacy and financial fragility during COVID-19. It further examines if financial literacy has a differential impact on financial fragility based on psychological (financial confidence), economic (wealth) and social (race) factors.Design/methodology/approachThe authors used nationally representative data of the American working age-group. They collated six different datasets collected at different time-periods to conduct the present study. Based on 2,202 observations, they conducted logistic regression analyses to test the proposed relationships.FindingsThe authors find that financial literacy reduces the odds of being financially fragile by 9.1%. Furthermore, they find that financially literate consumers having high financial confidence are less financially fragile during COVID-19. Besides, the adverse impact of financial literacy on financial fragility is more for consumers having more than less wealth. The interaction with race is not significant, suggesting that financial literacy cuts across racial boundaries.Practical implicationsFinancial fragility is an important factor having numerous deleterious consequences. The authors’ study found that financial confidence, psychological factor and wealth economic factor enhances the negative effect of financial literacy on financial fragility. Banks and financial institutes can develop mechanisms to infuse confidence in individuals during the pandemic to reduce their financial fragility. Policymakers and governments may increase awareness related to debt management practices and design financial literacy interventions to reduce financial fragility among individuals.Originality/valueThe study is one of the initial studies to examine the antecedents of financial fragility. Based on a time-lagged data, the authors’ study examines the linkage between financial literacy and financial fragility. Though scholars have investigated financial literacy and its implications, scholarly work in this domain during COVID-19 is at best limited. The study contributes to the literature by testing the effects of boundary conditions that can change financial literacy's impact on financial fragility.
PurposeMortgage delinquency has become a major crisis following the COVID-19 pandemic. This study explored mortgage delinquency antecedents, focusing on two individual-level factors: financial literacy and personality traits.Design/methodology/approachUsing a large sample of 2,511 consumers, we examined the direct effect of financial literacy and its interaction with personality traits to predict mortgage delinquency based on logistic regression analysis. We further provide several robustness tests to validate our findings.FindingsWe find that financially literate consumers are 6% less likely to delay their mortgage repayment during the COVID-19 pandemic. Moreover, personality traits such as neuroticism and extroversion positively and conscientiousness negatively moderate the given linkage between financial literacy and mortgage delinquency.Practical implicationsBanks and financial companies may devise relevant policies to reduce mortgage repayment by knowing the interplay between financial literacy and personality traits. Personality traits can be considered one of the parameters while sanctioning mortgages to prospective customers.Originality/valueOur research examines the linkage between financial literacy, personality traits and mortgage delinquency based on a large nationally representative sample. Our findings suggest that personality traits moderate the effect of financial literacy on mortgage delinquency.
Market efficiency is determined by how efficiently markets capture the information. Efficient markets can capture and incorporate all the available information into stock prices within no time. It means market prices traded are the actual prices of shares. There have been many theories trying to debate about how to determine market efficiency. If markets are efficient, there is no scope for investors to earn abnormal returns on the investments. In that case, investments in markets would not provide any additional returns. There have been many debates and theories on the topic of market efficiency. Postmodern portfolio theory (PMPT) came into existence after almost 40 years of the modern theory of portfolio given by Henry Markowitz. Both the theories give a risk–return framework for decision making and there are many conflicting aspects of market efficiency. I try to address this issue in this paper that raises concerns for the investor as to which markets are called efficient and what contributes to market efficiency, as denoted in modern portfolio theory (MPT) and post modern portfolio theory (PMPT).
PurposeThe purpose of this study is to examine income satisfaction among Millennials during COVID-19. The authors explore the roles of cognitive factors: financial literacy and noncognitive factors: personality traits. Further, the authors also determine if financial status moderates the linkage between consumers' financial literacy and income satisfaction.Design/methodology/approachThe sample size of the study is 1754, and the data were collected from April to December 2020. The authors employ ordered logistic regression analysis in the study.FindingsThe authors find that financially literate Millennials report high-income satisfaction during the pandemic. However, the impact of the cognitive factor gets nullified after considering the role of noncognitive factors. Further, income moderates the linkage between financial literacy and income satisfaction such that financially literate consumers in the high-income category derived more income satisfaction.Practical implicationsConsumer financial education should become more pervasive, and the focus should be placed on high-income consumers as, without financial literacy, they may not report high-income satisfaction. Further, the marketers should also keep in mind that personality traits play an important role in consumers' overall satisfaction, so financial services and products should be designed considering consumer personality traits.Originality/valueThe primary contribution of the paper is to show the positive impact of cognitive and noncognitive factors on income satisfaction. Moreover, personality traits are stronger predictors of income satisfaction such that extroverted individuals have high satisfaction, whereas openness to experience and neuroticism is negatively related to income satisfaction among Millennials.
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