The Behavioral Dynamics of Financial Vulnerability

Abstract

The rising costs of raw materials and logistics, as well as the persistent unpredictability surrounding pandemic, continue to constitute a substantial threat to the Malaysian economy. The uncertain nature of the labour market results in job loss, leaving individuals financially vulnerable. According to data from the Department of Insolvency, more than 50% of bankruptcies in Malaysia involved young adults. Therefore, this study was carried out among young adults in Malaysia to identify the predictors of financial vulnerability, through financial socialization and locus of control with the moderation of education level. Multi-stage sampling and self-administrative survey were employed to choose respondents from public sectors and private sectors. 1002 data were collected and the researcher employed the Structural Equation Modeling using Partial Least Square (PLS-SEM) to take into account the relationships between multiple variables. The result generated from the current study shows a significant relationship between Financial Socialization as well as Locus of Control towards Financial Behaviour. Through the analysis, there is also an evidence of Financial Behaviour significantly associated with Financial Vulnerability. In conclusion, the findings provide insight and make aware the young individuals in Malaysia to possess healthy financial behaviour to practice equitable financial management and avoid being vulnerable.