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Journal of Banking & Finance Vol. 153 2023

Determinants of individuals’ objective and subjective financial fragility during the COVID-19 pandemic

Stefanie Kleimeier1,2,3; Arvid O. I. Hoffmann4; Marie-Hélène Broihanne5,6; Daria Plotkina5,6; Anja S. Göritz7

1 Stellenbosch University · 2 Maastricht University · 3 Open University of the Netherlands · 4 The University of Adelaide · 5 EM Strasbourg Business School · 6 Université de Strasbourg · 7 University of Augsburg

open access

Abstract

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.

DOI
10.1016/j.jbankfin.2023.106881
Volume
153
Pages
106881
Language
en
Sources
openalex crossref bibtex:phds-export.bib

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