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Impact of negative emotions on financial behavior: An assessment through general strain theory

Author

Listed:
  • Khurram Ajaz Khan

    (Tomas Bata University in Zlín, Czechia)

  • Zdenko Metzker

    (Tomas Bata University in Zlín, Czechia)

  • Justas Streimikis

    (Lithuanian Centre for Social Sciences, Lithuania; University of Economics and Human Science, Poland)

  • John Amoah

    (Tomas Bata University in Zlín, Czechia)

Abstract

Research background: The research has two objectives and employs a serial mediation approach. First, using the general strain theory, it examines the mediating role of negative feelings and impact of economic adversity on people's risk tolerance and prudent financial behavior. The second is determining the various categories' variations according to age. Purpose of the article: The study's main objective is to evaluate financial behaviour of people with lower and medium incomes after the second wave of COVID-19 in India, and to contribute to the body of knowledge on general strain theory. Methods: The study examined the proposed framework and tested the serial mediation model based on the general strain theory used as a survey method for data collection, targeting lower and middle-income individuals in India's most populated state. The study applied PLS-SEM to test the framed hypotheses. Furthermore, the Kruskal Wallis test was applied to identify the difference in the various groups classified based on age. Findings & value added: The results reveal that economic hardship significantly influences improved financial behavior. Risk aversion attitude, loneliness, and depression mediate the relationship between economic hardship and financial behavior. Moreover, the study found quite a few significant differences between the different age groups. The present study will add to the existing literature on financial behavior under the scope of general strain theory and probably be among the few that test general strain theory with financial variables impact on lower and middle-income group individuals from a developing nation in post-COVID-19 period.

Suggested Citation

  • Khurram Ajaz Khan & Zdenko Metzker & Justas Streimikis & John Amoah, 2023. "Impact of negative emotions on financial behavior: An assessment through general strain theory," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 18(1), pages 219-254, March.
    • Handle: RePEc:pes:ierequ:v:18:y:2023:i:1:p:219-254
    DOI: 10.24136/eq.2023.007
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    More about this item

    Keywords

    COVID-19; risk attitude; loneliness; depression; economic hardship; general strain theory; GST; PLS-SEM;
    All these keywords.

    JEL classification:

    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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