Financial fragility and financial optimism linkage during COVID-19: Does financial literacy matter?

Chhatwani, Malvika and Mishra, Sushanta Kumar (2021) Financial fragility and financial optimism linkage during COVID-19: Does financial literacy matter? Journal of Behavioral and Experimental Economics, 94: 101751. ISSN 22148051

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COVID-19 and its consequences induced many challenges for individuals, and many of them experienced financial fragility. Financial optimism is crucial in this situation as it helps individuals and organizations recover from such situations. We argue that financial fragility has a long-term consequence on individuals and examined the adverse effect of financial fragility on financial optimism. Using a nationally representative dataset from the USA, we tested if financial literacy could minimize financial fragility's adverse impact on financial optimism. We found a negative linkage between financial fragility and financial optimism; the linkage was stronger for women. To address potential endogeneity, we conducted robustness analyses using instrumental variable regression and propensity score matching. The findings of the study provide implications to increase financial optimism during the pandemic.

Item Type: Article
Keywords: COVID-19 | Financial fragility | Financial literacy | Financial optimism | Gender
Subjects: Social Sciences and humanities > Economics, Econometrics and Finance > Banking and Finance
Social Sciences and humanities > Social Sciences > Health (Social sciences)
JGU School/Centre: Jindal School of Banking & Finance
Depositing User: Mr. Syed Anas
Date Deposited: 22 Dec 2021 07:24
Last Modified: 17 Jan 2022 16:07
Official URL:
Funders: University of Southern California, United States of America
Additional Information: “The study draws on data from the surveys administered by the Understanding America Study (UAS), which is maintained by the Center for Economic and Social Research (CESR) at the University of Southern California. The content of this paper is solely the responsibility of the authors and does not necessarily represent the official view of USC or UAS.”


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