IDEAS home Printed from https://ideas.repec.org/a/spr/soinre/v146y2019i3d10.1007_s11205-019-02138-4.html
   My bibliography  Save this article

Determinants of Subjective Financial Well-Being Across Three Different Household Income Groups in Malaysia

Author

Listed:
  • Nurul Shahnaz Mahdzan

    (University of Malaya)

  • Rozaimah Zainudin

    (University of Malaya)

  • Mohd Edil Abd. Sukor

    (University of Malaya)

  • Fauzi Zainir

    (University of Malaya)

  • Wan Marhaini Wan Ahmad

    (University of Malaya)

Abstract

Macro level economic and social indicators indicate disengagements between objective measurements and subjective consumer perceptions of the Malaysian economy. Objective measures show positive signals while subjective consumer perceptions depict pessimistic feelings about the economy. To provide more insights on this disparity, data is collected from 1867 Malaysian households to assess their subjective financial well-being (SFWB). In this vein, this study first examines the level of SFWB, financial stress, financial behaviour, financial knowledge, and locus of control (LOC) among Malaysians across three household income groups. Second, the study examines the association between financial stress, financial behaviour, financial knowledge, and LOC, with SFWB. For both objectives, the sample is split into three household income groups (low, middle and high income households, or the B40, M40 and T20, respectively) to analyse the differences. The results show that SFWB is at an average level of 5.2 out of 10 for the overall sample, with significant differences observed between the B40, M40 and T20 groups with SFWB scores of 4.3, 5.1 and 6.2 respectively. Financial behaviour and LOC have a significant positive relationship with SFWB, while financial stress and financial knowledge have a significant negative relationship with SFWB across all households. However, among the B40 group, financial knowledge had no significant relationship with SFWB. Lastly, the findings are discussed and policy recommendations for policymakers are provided.

Suggested Citation

  • Nurul Shahnaz Mahdzan & Rozaimah Zainudin & Mohd Edil Abd. Sukor & Fauzi Zainir & Wan Marhaini Wan Ahmad, 2019. "Determinants of Subjective Financial Well-Being Across Three Different Household Income Groups in Malaysia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 146(3), pages 699-726, December.
    • Handle: RePEc:spr:soinre:v:146:y:2019:i:3:d:10.1007_s11205-019-02138-4
    DOI: 10.1007/s11205-019-02138-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11205-019-02138-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11205-019-02138-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jing Xiao & Cheng Chen & Fuzhong Chen, 2014. "Consumer Financial Capability and Financial Satisfaction," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(1), pages 415-432, August.
    2. Brüggen, Elisabeth C. & Hogreve, Jens & Holmlund, Maria & Kabadayi, Sertan & Löfgren, Martin, 2017. "Financial well-being: A conceptualization and research agenda," Journal of Business Research, Elsevier, vol. 79(C), pages 228-237.
    3. Angela C. Lyons & Tansel Yilmazer, 2005. "Health and Financial Strain: Evidence from the Survey of Consumer Finances," Southern Economic Journal, John Wiley & Sons, vol. 71(4), pages 873-890, April.
    4. Pudney, Stephen, 2011. "Perception and retrospection: The dynamic consistency of responses to survey questions on wellbeing," Journal of Public Economics, Elsevier, vol. 95(3-4), pages 300-310, April.
    5. Salamanca, Nicolás & de Grip, Andries & Fouarge, Didier & Montizaan, Raymond, 2020. "Locus of control and investment in risky assets," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 548-568.
    6. Paul Gerrans & Craig Speelman & Guillermo Campitelli, 2014. "The Relationship Between Personal Financial Wellness and Financial Wellbeing: A Structural Equation Modelling Approach," Journal of Family and Economic Issues, Springer, vol. 35(2), pages 145-160, June.
    7. repec:zbw:rwirep:0455 is not listed on IDEAS
    8. Aimee Prawitz & Julie Kalkowski & Judith Cohart, 2013. "Responses to Economic Pressure by Low-Income Families: Financial Distress and Hopefulness," Journal of Family and Economic Issues, Springer, vol. 34(1), pages 29-40, March.
    9. Annamaria Lusardi & Olivia S Mitchelli, 2007. "Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 42(1), pages 35-44, January.
    10. Jing Xiao & Chuanyi Tang & Soyeon Shim, 2009. "Acting for Happiness: Financial Behavior and Life Satisfaction of College Students," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 92(1), pages 53-68, May.
    11. Tang, Ning & Baker, Andrew, 2016. "Self-esteem, financial knowledge and financial behavior," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 164-176.
    12. Margo Coleman & Thomas DeLeire, 2003. "An Economic Model of Locus of Control and the Human Capital Investment Decision," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
    13. Annamaria Lusardi & Olivia Mitchell, 2006. "Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education Programs," Working Papers wp144, University of Michigan, Michigan Retirement Research Center.
    14. Adele Atkinson & Flore-Anne Messy, 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 15, OECD Publishing.
    15. Drentea, Patricia & Lavrakas, Paul J., 2000. "Over the limit: the association among health, race and debt," Social Science & Medicine, Elsevier, vol. 50(4), pages 517-529, February.
    16. Jinhee Kim & Benoit Sorhaindo & E. Garman, 2006. "Relationship between Financial Stress and Workplace Absenteeism of Credit Counseling Clients," Journal of Family and Economic Issues, Springer, vol. 27(3), pages 458-478, September.
    17. van Praag, B. M. S. & Frijters, P. & Ferrer-i-Carbonell, A., 2003. "The anatomy of subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 51(1), pages 29-49, May.
    18. Annamaria Lusardi, 2008. "Household Saving Behavior: The Role of Financial Literacy, Information, and Financial Education Programs," NBER Working Papers 13824, National Bureau of Economic Research, Inc.
    19. Ivo Vlaev & Antony Elliott, 2014. "Financial Well-Being Components," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 118(3), pages 1103-1123, September.
    20. Greninger, Sue A. & Hampton, Vickie L. & Kitt, Karrol A. & Achacoso, Joseph A., 1996. "Ratios and benchmarks for measuring the financial well-being of families and individuals," Financial Services Review, Elsevier, vol. 5(1), pages 57-70.
    21. Bengt Starrin & Cecilia Åslund & Kent Nilsson, 2009. "Financial Stress, Shaming Experiences and Psychosocial Ill-Health: Studies into the Finances-Shame Model," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 91(2), pages 283-298, April.
    22. Anita I. Drever & Elizabeth Odders-White & Charles W. Kalish & Nicole M. Else-Quest & Emily M. Hoagland & Emory N. Nelms, 2015. "Foundations of Financial Well-Being: Insights into the Role of Executive Function, Financial Socialization, and Experience-Based Learning in Childhood and Youth," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(1), pages 13-38, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Grzywińska-Rąpca, Małgorzata, 2023. "Differentiation of European Households Living in Rural Areas Including Subjective Assessments of their Financial and Economic Situation-Comparative Analysis," Roczniki (Annals), Polish Association of Agricultural Economists and Agribusiness - Stowarzyszenie Ekonomistow Rolnictwa e Agrobiznesu (SERiA), vol. 2023(4).
    2. Maslina Mansor & Mohamad Fazli Sabri & Mustazar Mansur & Muslimah Ithnin & Amirah Shazana Magli & Abd Rahim Husniyah & Nurul Shahnaz Mahdzan & Mohd Amim Othman & Roza Hazli Zakaria & Nurulhuda Mohd Sa, 2022. "Analysing the Predictors of Financial Stress and Financial Well-Being among the Bottom 40 Percent (B40) Households in Malaysia," IJERPH, MDPI, vol. 19(19), pages 1-23, September.
    3. Ananthan Munisamy & Sheerad Sahid & Muhammad Hussin, 2022. "Socioeconomic Sustainability for Low-Income Households: The Mediating Role of Financial Well-Being," Sustainability, MDPI, vol. 14(15), pages 1-21, August.
    4. Angela Sorgente & Michela Zambelli & Margherita Lanz, 2023. "Are Financial Well-Being and Financial Stress the Same Construct? Insights from an Intensive Longitudinal Study," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 169(1), pages 553-573, September.
    5. Mahfuzur Rahman & Che Ruhana Isa & Muhammad Mehedi Masud & Moniruzzaman Sarker & Nazreen T. Chowdhury, 2021. "The role of financial behaviour, financial literacy, and financial stress in explaining the financial well-being of B40 group in Malaysia," Future Business Journal, Springer, vol. 7(1), pages 1-18, December.
    6. Carton, F.L. & Xiong, H. & McCarthy, J.B., 2022. "Drivers of financial well-being in socio-economic deprived populations," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    7. Ewa Genge, 2021. "LC and LC-IRT Models in the Identification of Polish Households with Similar Perception of Financial Position," Sustainability, MDPI, vol. 13(8), pages 1-22, April.
    8. Ifra Bashir & Ishtiaq Hussain Qureshi, 2023. "A Systematic Literature Review on Personal Financial Well-Being: The Link to Key Sustainable Development Goals 2030," FIIB Business Review, , vol. 12(1), pages 31-48, March.
    9. Vieira, Kelmara Mendes & Potrich, Ani Caroline Grigion & Bressan, Aureliano Angel & Klein, Leander Luiz, 2021. "Loss of financial well-being in the COVID-19 pandemic: Does job stability make a difference?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    10. Mahendru, Mandeep & Sharma, Gagan Deep & Pereira, Vijay & Gupta, Mansi & Mundi, Hardeep Singh, 2022. "Is it all about money honey? Analyzing and mapping financial well-being research and identifying future research agenda," Journal of Business Research, Elsevier, vol. 150(C), pages 417-436.
    11. P. P. Braga, Daniel & Pokorny, Benno & Porro, Roberto & Vidal, Edson, 2023. "Good life in the Amazon? A critical reflection on the standard of living of cocoa and cattle-based smallholders in Pará, Brazil," World Development Perspectives, Elsevier, vol. 31(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lu Fan & Robin Henager, 2022. "A Structural Determinants Framework for Financial Well-Being," Journal of Family and Economic Issues, Springer, vol. 43(2), pages 415-428, June.
    2. Osvaldo García-Mata & Mariana Zerón-Félix, 2022. "A review of the theoretical foundations of financial well-being," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(2), pages 145-176, June.
    3. Gentjan Çera & Khurram Ajaz Khan & Jaroslav Belas & Humberto Nuno Rito Ribeiro, 2020. "The Role of Financial Capability and Culture in Financial Satisfaction," Economic Papers, The Economic Society of Australia, vol. 39(4), pages 389-406, December.
    4. Ifra Bashir & Ishtiaq Hussain Qureshi, 2023. "A Systematic Literature Review on Personal Financial Well-Being: The Link to Key Sustainable Development Goals 2030," FIIB Business Review, , vol. 12(1), pages 31-48, March.
    5. Dung Phuong Hoang & Thi Hong Hai Nguyen & Nham Linh Vuong & Dat Luong, 2023. "Linking psychological needs, perceived financial well-being and loyalty: the role of commercial banks," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(3), pages 466-487, September.
    6. Mahendru, Mandeep & Sharma, Gagan Deep & Pereira, Vijay & Gupta, Mansi & Mundi, Hardeep Singh, 2022. "Is it all about money honey? Analyzing and mapping financial well-being research and identifying future research agenda," Journal of Business Research, Elsevier, vol. 150(C), pages 417-436.
    7. Jinhee Kim & Swarn Chatterjee, 2019. "Student Loans, Health, and Life Satisfaction of US Households: Evidence from a Panel Study," Journal of Family and Economic Issues, Springer, vol. 40(1), pages 36-50, March.
    8. Gagandeep Kaur & Manjit Singh, 2024. "Pathways to Individual Financial Well-Being: Conceptual Framework and Future Research Agenda," FIIB Business Review, , vol. 13(1), pages 27-41, January.
    9. Amany A. El Anshasy & Mrittika Shamsuddin & Marina-Selini Katsaiti, 2023. "Financial Wellbeing and International Migration Intentions: Evidence from Global Surveys," Journal of Happiness Studies, Springer, vol. 24(7), pages 2261-2289, October.
    10. M. Joseph Sirgy, 2018. "The Psychology of Material Well-Being," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 13(2), pages 273-301, June.
    11. Fu, Jonathan, 2020. "Ability or opportunity to act: What shapes financial well-being?," World Development, Elsevier, vol. 128(C).
    12. Travis P. Mountain & Namhoon Kim & Joyce Serido & Soyeon Shim, 2021. "Does Type of Financial Learning Matter for Young Adults’ Objective Financial Knowledge and Financial Behaviors? A Longitudinal and Mediation Analysis," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 113-132, March.
    13. Alex Yue Feng Zhu, 2018. "Parental Socialization and Financial Capability Among Chinese Adolescents in Hong Kong," Journal of Family and Economic Issues, Springer, vol. 39(4), pages 566-576, December.
    14. Osvaldo García-Mata & Mariana Zerón-Félix & Guadalupe Briano, 2022. "Financial Well-Being Index in México," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 163(1), pages 111-135, August.
    15. Noviarini, Jelita & Coleman, Andrew & Roberts, Helen & Whiting, Rosalind H., 2023. "Financial literacy and retirees' resource allocation decisions in New Zealand," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    16. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy around the world: an overview," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 497-508, October.
    17. Jae Min Lee & Jonghee Lee & Kyoung Tae Kim, 2020. "Consumer Financial Well-Being: Knowledge is Not Enough," Journal of Family and Economic Issues, Springer, vol. 41(2), pages 218-228, June.
    18. Marco Nieddu & Lorenzo Pandolfi, 2018. "Cutting Through the Fog: Financial Literacy and the Subjective Value of Financial Assets," CSEF Working Papers 497, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    19. Kadoya, Yoshihiko & Khan, Mostafa Saidur Rahim, 2020. "What determines financial literacy in Japan?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 19(3), pages 353-371, July.
    20. Annamaria Lusardi, 2008. "Financial Literacy: An Essential Tool for Informed Consumer Choice?," NFI Working Papers 2008-WP-13, Indiana State University, Scott College of Business, Networks Financial Institute.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:soinre:v:146:y:2019:i:3:d:10.1007_s11205-019-02138-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.