Mediation Effect of Financial Education between Financial Stress and Use of Financial Technology

Abstract

This study investigated the relationship between financial stress and financial technology and included the mediating role of financial knowledge based on the ABC-X model. This study used the 2018 National Financial Capability Study to construct financial stress and the use of financial technology and tested the proposed model with two subgroups: one group with financial education and the other group without financial education. We used confirmatory factor analysis and structural equation modeling to evaluate our model. Results show that respondents with a greater level of financial stress generally tended to more engage in financial technology. When the role of financial knowledge was considered in the model, the relationship between financial stress and the use of financial technology varied by the type of financial knowledge. Although this study did not identify the onset of the coping process directly, the direct effect of financial stress on the use of financial technology in each subgroup regardless of their financial education experience confirms efforts of looking for coping when facing and responding to financially stressful situations. Thus, this study sheds light on the new technology for financial services as a potential tool for better financial management and as a coping mechanism for those with financial stress. Results from this study provide insights for financial practitioners and educators who help US households manage their financial stress.