The 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…
Abstract
Purpose
The 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/approach
The 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.
Findings
The 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 implications
Consumer 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/value
The 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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Mortgage delinquency has become a major crisis following the COVID-19 pandemic. This study explored mortgage delinquency antecedents, focusing on two individual-level factors…
Abstract
Purpose
Mortgage 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/approach
Using 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.
Findings
We 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 implications
Banks 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/value
Our 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.
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Artificial intelligence and robo-advisory have become prevalent in the finance industry, and many people rely on robots instead of humans for financial advice. This study aims to…
Abstract
Purpose
Artificial intelligence and robo-advisory have become prevalent in the finance industry, and many people rely on robots instead of humans for financial advice. This study aims to examine whether robo-advisory increases retirement worry based on agency theory and rational choice theory.
Design/methodology/approach
The present study investigate whether relying on robots for financial advice increases retirement-related worry in the present study. Using a sample of 1915 investors from the National Financial Capability Study (NCFS) survey, the author conducted instrumental variable regression analysis to examine the causal linkage.
Findings
Using fear of financial fraud as an instrument variable, the study provides a causal explanation of the linkage between robo-advisory usage and retirement worry. After controlling for sociodemographic and financial literacy-related variables, it is found that robo-advisory increases retirement worry.
Originality/value
Findings of the study emphasize on downsides of the artificial intelligence-enabled robo-advisory for financial planning. This article provides evidence that a lack of human involvement in financial planning may lead to increased worry among investors, which calls for attention from the regulators and policymakers.
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Malvika Chhatwani and Sushanta Kumar Mishra
The 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…
Abstract
Purpose
The 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/approach
The 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.
Findings
The 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 implications
Financial 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/value
The 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.