Indian Journal of Finance

Open Access Open Access  Restricted Access Subscription Access

Financial Wellbeing Among Public and Private Sector Employees: A Preliminary Study


Affiliations
1 University of Delhi, Delhi – 110 007, India

   Subscribe/Renew Journal


Financial wellbeing of an individual is an important component of overall financial wellbeing. Further, financial wellbeing has often been linked to the job performance and efficiency of the employee. Hence, financial wellbeing is not only important for individuals, but also for their organization and country at large. The current study utilized 105 valid survey responses collected during December 2018 from private and public sector employees in NCT of Delhi, India. The study further examined the level of perceived financial wellbeing (FWB), financial behaviors, and financial literacy among employees of private and public sectors. Furthermore, the association between financial behaviors, financial literacy, and demographics with FWB was analyzed using structural equation modelling (SEM). Finally, the study evaluated the difference in the path to FWB among public and private sector employees by splitting the data into two groups. The results indicated that financial behavior was the strongest predictor of financial wellbeing. Amongst the various responsible financial behaviors measured in the study, making correct product choice, active savings, and spending restraint were the significant factors. Further, the results demonstrated that there was no statistically significant difference in the mean subjective FWB score among the private and public sector employees. However, the pathways to achieving subjective financial wellbeing were not the same among the two groups.

Keywords

Financial Wellbeing, Financial Behavior, Financial Literacy, Public Employee, Private Employee.
User
Subscription Login to verify subscription
Notifications
Font Size

  • Andreev, P., Heart, T., Maoz, H., & Pliskin, N. (2009). Validating formative partial least squares (PLS) models: Methodological review and empirical illustration. In, ICIS 2009 Proceedings (p. 193). Retrieved from http://aisel.aisnet.org/icis2009/193

  • Atkinson, A., & Messy, F. - A. (2012). Measuring financial literacy: Results of the OECD/International Network on Financial Education (INFE) pilot study (OECD Working Papers on Finance, Insurance and Private Pensions No. 15). DOI: 10.1787/5k9csfs90fr4-en

  • Attridge, M. (2009). Measuring and managing employee work engagement: A review of the research and business literature. Journal of Workplace Behavioral Health, 24(4), 383 – 398.

  • Bakar, A. A., Osman, M. M., Bachok, S., & Ibrahim, M. (2016). Investigating rationales of Malaysia quality of life and wellbeing components and indicators. Procedia-Social and Behavioral Sciences, 222, 132–142. DOI: 10.1016/j.sbspro.2016.05.202

  • Bannier, C. E., & Schwarz, M. (2018). Gender- and education-related effects of financial literacy and confidence on financial wealth. Journal of Economic Psychology, 67(C), 66 – 86. DOI:10.1016/j.joep.2018.05.005

  • Beinhocker, E. D. (2007). Tracking the growth of India's middle class. The McKinsey Quarterly, 3(3), 51– 61.

  • Bhonde-Saraf, A. (2016). Are women financially educated ? A study with reference to earning women of Aurangabad District, Maharashtra. Indian Journal of Finance, 10(3), 43 – 51. doi:10.17010/ijf/2016/v10i3/89021

  • Bolaji-Adio, A., Iarossi, G., Perotti, V., & Zottel, S. (2013). Making sense of financial capability surveys around the world: A review of existing financial capability and literacy measurement instruments. Washington DC : W o r l d B a n k . R e t r i e v e d f r o m http://documents.worldbank.org/curated/en/220801468323962930/Making-sense-of-financialcapability-surveys-around-the-World-a-review-of-existing-financial-capability-and-literacymeasurement-instruments

  • Bucher-Koenen, T., Lusardi, A., Alessie, R., & Van Rooij, M. (2016). How financially literate are women ? An overview and new insights. The Journal of Consumer Affairs, 51(2), 255 – 283. DOI:10.1111/joca.12121

  • Chin, W. W. (1998a.). Commentary: Issues and opinion on structural equation modeling. MIS Quarterly, 22(1), 7 – 16.

  • Chin, W. W. (1998b.). The partial least squares approach to structural equation modeling. In G. A. Marcoulides (ed.), Methodology for business and management. Modern methods for business research (pp. 295 – 336). Mahwah, NJ, US: Lawrence Erlbaum Associates Publishers.

  • Cohen, J. (1988). Statistical power analysis for the behavioral science (2nd ed.). NJ: Lawrence Erlbaum Associates.

  • Consumer Financial Protection Bureau. (2015). Financial well-being : The goal of financial education. Retrieved from https://files.consumerfinance.gov/f/201501_cfpb_report_financial-well-being.pdf

  • Dangi, M., & Kohli, B. (2018). Role of behavioral biases in investment decisions: A factor analysis. Indian Journal of Finance, 12(3), 43 – 57.

  • Dew, J., & Xiao, J. J. (2011). The financial management behavior scale: Development and validation. Journal of Financial Counseling and Planning, 22(1), 43 – 59. doi:10.17010/ijf/2018/v12i3/121997

  • Directorate General of Employment, Ministry of Labour & Employment. (Various years). Economic Survey of India. Retrieved from https://www.indiabudget.gov.in/economicsurvey/allpes.php

  • Disney, R., & Gathergood, J. (2013). Financial literacy and consumer credit portfolios. Journal of Banking and Finance, 37(7), 2246 – 2254.

  • Dunn, L., & Mirzaie, I. A. (2012). Determinants of consumer debt stress: Differences by debt type and gender (Working Paper). Ohio State University. Retrieved from https://www.chrr.ohiostate.edu/content/surveys/cfm/doc/DSI-Working-Paper-07-19-12.pdf

  • Falahati, L., Sabri, M. F., & Paim, L. H. (2012). Assessment a model of financial satisfaction predictors: Examining the mediate effect of financial behavior and financial strain. World Applied Sciences Journal, 20(2), 190 – 197.

  • Fornell, C., & Larcker, D. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39 – 50.

  • Garman, E. T., Sorhaindo, B., Bailey, W., Kim, J., & Xiao, J. J. (2004). Financially distressed credit counseling clients and the incharge financial distress/financial well-being scale. (pp. 71– 81). Proceedings of the Eastern Regional Family Economics and Resource Management Association Conference. Retrieved from https://pfeef.org/wp-content/uploads/2016/09/Financially-Distressed-Clients-and-the-Scale.pdf

  • Garman, T., & Forgue, R. (2014). Personal finance (12th ed.). Boston: Cengage Learning.

  • Gautam, S., & Matta, M. (2016). A study of socio-demographic and attitudinal factors on consumer behavior by individual investors in the Indian context. Indian Journal of Finance, 10(7), 48 – 59. DOI:10.17010/ijf/2016/v10i7/97256

  • Hair, J., Ringle, C., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. The Journal of Marketing Theory and Practice, 19(2), 139 – 152.

  • Henseler, J., Ringle, C., & Sinkovics, R. (2009). The use of partial least squares path modeling in international marketing. In R. Sinkovics, & P.Ghauri (eds.), Advances in International Marketing, (Vol. 20, pp. 277 – 320). Bingley : Emerald Group Publishing.

  • Hilgert, M. A., Hogarth, J., & Beverly, S. (2003). Household financial management: The connection between knowledge and behavior. Federal Reserve Bulletin, July 2003, 309–332. Retrieved from https://www.federalreserve.gov/pubs/bulletin/2003/0703lead.pdf

  • Hojman, D. A., Miranda, Á., & Ruiz-Tagle, J. (2016). Debt trajectories and mental health. Social Science & Medicine, 167(C), 54–62. DOI: 10.1016/j.socscimed.2016.08.027

  • Huston, S. J. (2010). Measuring financial literacy. Journal of Consumer Affairs, 44(2), 296 – 316.

  • Joo, S. (2008). Personal financial wellness. In J. J. Xiao (ed.), Handbook of consumer finance research (pp. 21– 33). New York, NY: Springer.

  • Joo, S. H., & Grable, J. E. (2004). An exploratory framework of the determinants of financial satisfaction. Journal of Family and Economic Issues, 25(1), 25–50.

  • Kaur, G. (2014). Employee attrition in ITeS call centers in selected clusters of North India (Unpublished PhD Dissertation). L. M. Thapar School of Management, Thapar University, Patiala, Punjab. Retrieved from http://tudr.thapar.edu:8080/jspui/bitstream/10266/3327/4/3327.pdf

  • Kempson, E., Finney, A., & Poppe, C. (2017). Financial well-being: A conceptual model and preliminary analysis (SIFO Project Note No. 3-2017). Oslo : Oslo and Akershus University College of Applied Sciences.

  • Kim, J., & Garman, E. T. (2003). Financial stress and absenteeism: An empirically derived model. Financial Counseling and Planning, 14(1), 31– 42.

  • Kim, J., & Garman, E. T. (2004). Financial stress, pay satisfaction and workplace performance. Compensation & Benefits Review, 36(1), 69–76. https://doi.org/10.1177/0886368703261215

  • Lokhande, M.A. (2015). A study of investment awareness and patterns of savings and investments by rural investors. Indian Journal of Finance, 9 (7), 22–31. DOI: 10.17010//2015/v9i7/72351

  • Lusardi, A. (2008). Financial literacy: An essential tool for informed consumer choice ? (NBER Working Paper No. 14084) . Retrieved from https://www.nber.org/papers/w14084.pdf

  • Lusardi, A., & Mitchell, O. S. (2011). Financial literacy and planning: Implications for retirement wellbeing (Working Paper No. w17078). National Bureau of Economic Research. Retrieved from https://www.nber.org/papers/w17078.pdf

  • Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44.

  • Lusardi, A., & Mitchell, O. (2017). How ordinary consumers make complex economic decisions: Financial literacy and retirement readiness. Quarterly Journal of Finance, 7(03), 1 – 31.

  • Lusardi, A., & Tufano, P. (2015). Debt literacy, financial experiences, and overindebtedness. Journal of Pension Economics & Finance, 14(4), 332–368. DOI: https://doi.org/10.1017/S1474747215000232

  • Mathur, N. (2010). Shopping malls, credit cards and global brands: Consumer culture and lifestyle of India's new middle class. South Asia Research, 30(3), 211 – 231.

  • McNeish, D. (2018). Thanks coefficient alpha, we'll take it from here. Psychological Methods, 28(3), 412 – 433. DOI: https://doi.org/10.1037/met0000144

  • Mokhtar, N., Husniyah, A. R., Sabri, M. F., & Talib, M. F. (2015). Financial well-being among public employees in Malaysia: A preliminary study. Asian Social Science, 11(18), 49 – 54.

  • Mottola, G. (2013). In our best interest: women, financial literacy, and credit card behavior. Numeracy, 6(2), Article 4. DOI: http://dx.doi.org/10.5038/1936-4660.6.2.4

  • Muleke, V., & Muriithi, J. G. (2013). Financial education on employees' financial wellbeing in academia in Tharaka Nithi County in Kenya. European Journal of Business and Management, 5(15), 142 – 147.

  • Muralidharan, T. (2015, November 16). Why the craze for government jobs ? The Hindu. Retrieved from https://www.thehindu.com/features/education/careers/why-the-craze-for-governmentjobs/article7877282.ece

  • Nunally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). New York: McGraw-Hill.

  • OECD. (2017). G20/OECD INFE report on adult financial literacy in G20 countries. Paris: OECD Publishing. Retrieved from http://www.oecd.org/daf/fin/financial-education/G20-OECD-INFE-report-adultfinancial-literacy-in-G20-countries.pdf

  • OECD. (2018). OECD/INFE toolkit for measuring financial literacy and financial inclusion. Retrieved from http://www.oecd.org/daf/fin/financial-education/2018-INFE-FinLit-Measurement-Toolkit.pdf

  • O'Neill, B., Sorhaindo, B., Xiao, J. J., & Garman, E. T. (2005). Financially distressed consumers: Their financial practices, financial well-being, and health. Financial Counseling and Planning, 16(1), 73 – 87.

  • Pedersen, J. D. (2000). Explaining economic liberalization in India: State and society perspectives. World Development, 28(2), 265 – 282.

  • Prawitz, A., Garman, E. T., Sorhaindo, B., O'Neill, B., Kim, J., & Drentea, P. (2006). Incharge financial distress/financial well-being scale: Development, administration, and score interpretation. Journal of Financial Counseling and Planning, 17(1), 34 – 50.

  • Ramesh, S., Senthil Kumar, A., & Sayyed, N. (2019). Impact of personality measures and investors' biases on decision - making skills of women investors in mutual funds. Indian Journal of Finance, 13(4), 7 – 19. DOI:10.17010/ijf/2019/v13i4/143124

  • Ramli, Z., Masud, J., Haron, S. A., Othman, M., Awang, A. H., & Md Sum, S. (2013). Financial well-being: Financial ratio analysis of married public sector workers in Malaysia. Asian Social Science, 9(14), 1–6. https://doi.org/10.5539/ass.v9n14p1

  • Raut, R. K., & Das, N. (2015). Behavioral prospects of individual investor decision making process: A review. Indian Journal of Finance, 9(4), 44–55. doi:10.17010/ijf/2015/v9i4/71457

  • Sabri, M. F., & Juen, T. T. (2014). The influence of financial literacy, saving behaviour, and financial management on retirement confidence among women working in the Malaysian public sector. Asian Social Science, 10(14), 40.Doi: 10.5539/ass.v10n14p40

  • Schmeiser, M. D., & Seligman, J. S. (2013). Using the right yardstick: Assessing financial literacy measures by way of financial well-being. Journal of Consumer Affairs, 47(2), 243 – 262.

  • Seibert, K., & Meredith, B. (2014). Improving retirement readiness for state and local government employees. Retirement Insights and Trends. Retrieved from https://www.retirement-insight.com/improvingretirement-readiness-state-local-government-employees/

  • Shim, S., Xiao, J., Barber, B., & Lyons, A. (2009). Pathway to life success: A model of financial well-being for young adults. Journal of Applied Developmental Psychology, 30(6), 708 – 723.

  • Shobha, T. S., & Chakraborty, S. (2017). Psychological factors contributing to the financial well-being of an individual: A review of empirical literature. Indian Journal of Finance, 11(10), 51 – 66.

  • Singh, H. P., Goyal, N., & Kumar, S. (2016). Behavioural biases in investment decisions: An exploration of the role of gender. Indian Journal of Finance, 10(6), 51 – 62. DOI: 10.17010/ijf/2016/v10i6/94879

  • Skimmyhorn, W. (2016). Assessing financial education: Evidence from boot camp. American Economic Journal: Economic Policy, 8(2), 322 – 343.

  • Subramaniam, G., Ali, E., & Maniam, B. (2014). Subjective financial wellbeing and incidence of indebtedness among young workers in Malyasia. Business Studies Journal, 6(2), 57 – 65.

  • Tang, N., & Baker, A. (2016). Self-esteem, financial knowledge and financial behavior. Journal of Economic Psychology, 54 (C), 164 – 176. DOI: 10.1016/j.joep.2016.04.005

  • Taylor, P., D'Cruz, P., Noronha, E., & Scholarios, D. (2013). The experience of work in India's domestic call centre industry. The International Journal of Human Resource Management, 24(2), 436 – 452.

  • Van Praag, B. M., Frijters, P., & Ferrer - i - Carbonell, A. (2003). The anatomy of subjective well-being. Journal of Economic Behavior and Organization, 51(1), 29 – 49.

  • Van Rooij, M., Lusardi, A., & Alessie, R. (2011). Financial literacy and stock market participation. Journal of Financial Economics, 101(2), 449 – 472.

  • Xiao, J. J. (2008). Applying behavior theories to financial behavior. In, Handbook of consumer finance research (pp. 69 – 81). New York, NY: Springer.

  • Xiao, J. J., Chen, C., & Chen, F. (2014). Consumer financial capability and financial satisfaction. Social Indicators Research, 118(1), 415 – 432.


Abstract Views: 211

PDF Views: 0




  • Financial Wellbeing Among Public and Private Sector Employees: A Preliminary Study

Abstract Views: 211  |  PDF Views: 0

Authors

Kanchan Sehrawat
University of Delhi, Delhi – 110 007, India
Madhu Vij
University of Delhi, Delhi – 110 007, India

Abstract


Financial wellbeing of an individual is an important component of overall financial wellbeing. Further, financial wellbeing has often been linked to the job performance and efficiency of the employee. Hence, financial wellbeing is not only important for individuals, but also for their organization and country at large. The current study utilized 105 valid survey responses collected during December 2018 from private and public sector employees in NCT of Delhi, India. The study further examined the level of perceived financial wellbeing (FWB), financial behaviors, and financial literacy among employees of private and public sectors. Furthermore, the association between financial behaviors, financial literacy, and demographics with FWB was analyzed using structural equation modelling (SEM). Finally, the study evaluated the difference in the path to FWB among public and private sector employees by splitting the data into two groups. The results indicated that financial behavior was the strongest predictor of financial wellbeing. Amongst the various responsible financial behaviors measured in the study, making correct product choice, active savings, and spending restraint were the significant factors. Further, the results demonstrated that there was no statistically significant difference in the mean subjective FWB score among the private and public sector employees. However, the pathways to achieving subjective financial wellbeing were not the same among the two groups.

Keywords


Financial Wellbeing, Financial Behavior, Financial Literacy, Public Employee, Private Employee.

References





DOI: https://doi.org/10.17010/ijf%2F2020%2Fv14i1%2F149855