Deterioration of the subjective financial well-being during the coronavirus pandemic: a latent transition analysis

Abstract

PurposeThe authors seek (1) to identify the profiles of subjective financial well-being (SFWB) of bank customers before and during the coronavirus disease 2019 (COVID-19) pandemic, (2) to analyze the transition to profiles of lower SFWB during the pandemic and (3) to identify the factors driving such transitions.Design/methodology/approachThe authors surveyed five countries during 2019 and 2020 to measure SFWB. The authors applied latent class analysis (LCA) to identify profiles of bank customers according to a mix of SFWB indicators in pre-pandemic times (Study 1). The authors validated the profiles during the pandemic and identified the SFWB dimensions that deteriorated during the crisis (Study 2). Finally, the authors applied latent transition analysis (LTA) to explore transitions to profiles of lower SFWB and identify the drivers.FindingsThe authors identified three profiles of customers in pre- and post-pandemic periods for four dimensions of SFWB: control over finances, capacity to absorb financial shocks, ability to track financial goals and financial freedom. Gender, age, trust in banks and bank-supporting policies were related to transitions across profiles of SFWB during the pandemic. These relationships are contingent upon contextual country-related variables.Research limitations/implicationsBanks and policymakers should reduce customers' exposure to the pandemic's long-lasting adverse effects on SFWB and should identify and control the multiplier role that contextual variables play.Originality/valueExtant literature has not fully identified the dimensions of SFWB that changed due to the COVID-19 pandemic. The authors narrow this gap by identifying three SFWB profiles of customers, analyzing the patterns of SFWB change and connecting these changes to individual, provider and contextual factors.

Financial Well-Being Scale: Evidence of Validity and Reliability in Peruvian Context

“…Knowing the importance of financial well-being, there are investigations that try to measure it through a questionnaire; in this way, certain measures have been identified in the scientific literature, such as the Perceived Financial Well-being Scale (PFWBS) proposed by Viera et al, (2023) made up of 34 items and 04 dimensions, which are: financial security, financial tranquility, financial freedom and satisfaction with financial management ; from another instance, Nguyen (2021) applied the financial well-being scale made up of 04 items in his study. In addition, (Losada-Otálora et al, 2023)established the SGWB scale that aims to measure financial well-being through 04 dimensions: control over finances, ability to absorb financial shocks, ability to follow financial goals, and freedom financial. Prawitz et al, (2006) reported on the same variable, identifying a construct made up of 08 items called InCharge Finance Distress / Financial Wellbeing (IFDFW).…”