Financial Well-Being of Working Women: Mediating Effect of Cashless Financial Experience and Digital Financial Self-Socialization

Abstract

With increasing complexity of financial products and services, unprecedented volatility of financial markets, diffusion of pandemic related health and economic risks and limited policy tools to deal with the systemic crisis – the convergence of all these factors has increased the economic vulnerability of individuals, households, businesses and nations; heightening the need for financial safety nets and for financial literacy. Despite higher female workforce participation, most from the expanding middle class, Indian women are still found deficient in financial knowledge only 1% of Indian women can be acknowledged as highly financially literate. The motivation of this study is the emergence of new financial behaviour in pandemic times, namely increased cashless transactions, spurt in online learning and stock market trading, increased number of new investors and increased access to financial information – all of which can be channeled for the strategic well-being of Indian women. The study attempts to understand how three mediators – contribution to household budget, cashless financial experience and financial socialization through self-sought digital informational sources, can influence the relationship between women’s financial literacy and financial well-being. Through statistical testing, the study found direct effect of financial literacy on financial well-being of working women. The study also found a significant indirect effect such that financial literacy leads to higher frequency of financial experience of cashless transactions, which in turn leads to greater digital financial self-socialization and this ultimately impacts financial well-being positively. Since there is poor literature showing that causality flow from financial literacy to financial well-being, the dual evidence from this research that there is significant direct and indirect effect fills this gap. This insight can find immediate application as Govt. policy has already focused on all key dimensions – greater financial inclusion, more concerted efforts at financial education and greater digitization of financial services and products. The inter-relations between these dimensions are very significant and become more so crucial during the pandemic times.