TY - JOUR
T1 - Determinants of individuals’ objective and subjective financial fragility during the COVID-19 pandemic
AU - Kleimeier, Stefanie
AU - Hoffmann, Arvid O.I.
AU - Broihanne, Marie Hélène
AU - Plotkina, Daria
AU - Göritz, Anja S.
N1 - Funding Information:
The authors gratefully acknowledge financial support received from the Academic Consortium for the 21st Century (AC21) Special Project Fund for data collection purposes.
Publisher Copyright:
© 2023
PY - 2023/8
Y1 - 2023/8
N2 - We examine determinants of the objective and subjective financial fragility of 2100 individuals across Australia, France, Germany, and South Africa during the COVID-19 pandemic. Objective financial fragility reflects individuals’ (in)ability to deal with unexpected expenses, while subjective financial fragility reflects their emotional response to financial demands. Controlling for an extensive set of socio-demographics, we find that negative personal experiences during the pandemic (i.e., reduced or lost employment; COVID-19 infection) are associated with higher objective and subjective financial fragility. However, individuals’ cognitive (i.e., financial literacy) as well as non-cognitive abilities (i.e., internal locus of control; psychological resilience) help to counteract this higher financial fragility. Finally, we examine the role of government financial support (i.e., income support; debt relief) and find that it is negatively related to financial fragility only for the economically weakest households. Our results have implications for public policymakers, providing levers for reducing individuals’ objective and subjective financial fragility.
AB - We examine determinants of the objective and subjective financial fragility of 2100 individuals across Australia, France, Germany, and South Africa during the COVID-19 pandemic. Objective financial fragility reflects individuals’ (in)ability to deal with unexpected expenses, while subjective financial fragility reflects their emotional response to financial demands. Controlling for an extensive set of socio-demographics, we find that negative personal experiences during the pandemic (i.e., reduced or lost employment; COVID-19 infection) are associated with higher objective and subjective financial fragility. However, individuals’ cognitive (i.e., financial literacy) as well as non-cognitive abilities (i.e., internal locus of control; psychological resilience) help to counteract this higher financial fragility. Finally, we examine the role of government financial support (i.e., income support; debt relief) and find that it is negatively related to financial fragility only for the economically weakest households. Our results have implications for public policymakers, providing levers for reducing individuals’ objective and subjective financial fragility.
KW - Financial fragility
KW - Financial literacy
KW - Government support
KW - Internal locus of control
KW - Psychological resilience
U2 - 10.1016/j.jbankfin.2023.106881
DO - 10.1016/j.jbankfin.2023.106881
M3 - Article
AN - SCOPUS:85160509937
SN - 0378-4266
VL - 153
SP - 1
EP - 18
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
M1 - 106881
ER -