Unveiling the influence of financial vulnerability on healthy financial behaviour: a moderated mediation analysis

This study investigates the impact of financial vulnerability on individuals’ healthy financial behavior amidst economic challenges, addressing a critical yet underexplored area in existing research. Emphasizing the psychological mechanisms, it examines the mediating role of financial stress in the relationship between financial vulnerability and healthy financial behavior. The study also explores the moderating role of financial literacy through a moderated mediation analysis. Findings reveal that financial vulnerability positively influences healthy financial behavior, with financial stress playing a significant mediating role. In addition, individuals with high financial literacy are better equipped to mitigate the adverse effects of financial vulnerability on financial stress, enabling them to cope effectively with financial challenges. The practical implications provide insights for financial institutions to design tailored financial products and strategies that promote responsible financial practices, enhance well-being, and empower individuals based on their literacy levels. This study contributes to understanding financial decision-making in turbulent economic times.