A study of mediating effect of DFL among Financial attitude, Financial Socialization and Personal Financial Management Behavior. A SEM Approach

Abstract

This study employs a Structural Equation Modeling (SEM) approach to comprehensively investigate the mediating role of Digital Financial Literacy (DFL) in the complex dynamics among Financial Attitude (FA), Financial Socialization (FS), and Personal Financial Management Behavior (PFMB). The purpose of the research is to enhance our understanding of the interplay between psychological factors, social influences, digital literacy, and the resultant financial behaviors in individuals. Methodology involves a cross-sectional design with a diverse sample, employing a survey questionnaire to measure FA, FS, DFL, and PFMB. SEM is utilized to model the latent constructs and analyze the intricate relationships within the proposed framework. Findings reveal a significant mediation effect of DFL between FA and PFMB, showcasing the transformative role of digital literacy in shaping financial behaviors. Positive financial socialization experiences are found to contribute to higher levels of DFL, emphasizing the familial and peer influences on individuals' digital financial capabilities. The study underscores the importance of integrating digital literacy education into financial programs, particularly emphasizing its mediation role. The value of this study lies in its nuanced exploration of the mediation pathways, providing actionable insights for policymakers, educators, and financial institutions. The originality lies in the integration of psychological and social factors with digital literacy, contributing to a holistic understanding of the mechanisms influencing personal financial behaviors in the digital age. This research informs the development of targeted interventions to foster positive financial outcomes by addressing the multifaceted relationships explored in this SEM-based study.