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Abstract
The coronavirus disease 2019 (COVID-19) pandemic has become a global humanitarian challenge. This scourge has impacted people from all walks of life as well as every economic sector and activity, from travel to automotives, hotels to banking, and supply chain to retail. The pandemic has affected not only physical and mental health but also financial health. Studies have examined the pandemic’s economic impact, but very few have examined its impact on personal finances. Efforts to contain the pandemic’s spread, such as lockdowns, have resulted in suspended business operations throughout the world that have intensified joblessness. To prepare and protect people from such unforeseen situations, financial education and planning are necessary. We attempt to expand the evidence on this issue by applying a structural equation modelling approach to identify the mediating role of financial literacy programs in preparing and protecting household wealth against sudden worldwide setbacks. The research design is descriptive and exploratory using snowball sampling technique. The data was collected through an internet survey. In total, 400 survey responses were obtained. After testing the measurement model for key validity dimensions, the hypothesised causal relationships are examined in several path models. The results indicated that coronavirus awareness exerts a direct or indirect influence on the financial health of individuals through financial literacy. We conclude that financial literacy has a full mediating effect on the personal finance of individuals during the COVID-19 pandemic. The findings not only contributed to the need and understanding of financial literacy but also have managerial implications. Financial literacy programs provide investment advice and suggestions which are actionable and also work to help individuals to come out stronger in terms of knowledge and skill set when the COVID-19 crisis passes.
Highlights
This study examines the effect of the coronavirus pandemic on the financial health of the urban banking public in general, and the mediating effect that financial literacy may have
Our research examines the effect of the COVID-19 pandemic, and of the subsequent lockdowns to arrest its spread, on the financial health of individuals
We have supposed that a group of 2000-3000 urban working individuals needs to be surveyed to gauge the effect of coronavirus awareness and the mediating effect of financial literacy on the financial health of individuals in COVID-19
Summary
Any reports and responses or comments on the article can be found at the end of the article. Any further responses from the reviewers can be found at the end of the article Introduction A pandemic refers to any sudden outbreak of contagious disease over a wide geographical area, accompanied by high morbidity and mortality rates (Madhav et al, 2017) It can cause major socio-economic and political disruptions as it directly or indirectly interrupts and hinders all events, activities, and processes pertaining to global development. (Widyastuti et al, 2016) did a research on the impact of subjective norm, attitude, and financial literacy on the savings intention and behavior of the teacher students of a university in Jakarta, Indonesia. Our research examines the effect of the COVID-19 pandemic, and of the subsequent lockdowns to arrest its spread, on the financial health of individuals. Financial health incorporates four areas of personal finance: savings, spending, borrowing, and planning
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