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Financial Well-Being and Financial Capability among Low-Income Entrepreneurs

Author

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  • Baorong Guo

    (School of Social Work, University of Missouri—St. Louis, St. Louis, MO 63121, USA)

  • Jin Huang

    (School of Social Work, Saint Louis University, St. Louis, MO 63103, USA
    Center for Social Development, Washington University in St. Louis, St. Louis, MO 63130, USA)

Abstract

Financial well-being is a key component of quality of life and overall well-being and is likely to affect other aspects of quality of life, such as health and health care. The COVID-19 pandemic presents an immense crisis of financial well-being among low-income entrepreneurs and has left many small-scale entrepreneurs financially fragile. We argue that promoting the financial capability of low-income entrepreneurs is effective in protecting their financial well-being from a crisis. To examine the association between financial capability and the financial well-being of low-income entrepreneurs, we use the 2016 National Financial Well-Being Survey, which provides the latest and comprehensive measurement of financial capability, including financial knowledge, financial skills, and access to financial products and services. Our analyses show that, compared to their higher-income counterparts, low-income entrepreneurs have statistically lower levels of financial well-being, financial knowledge, financial skills, and access to mainstream financial products; they also have a statistically higher risk of using high-fee alternative financial products. In addition, low-income entrepreneurs have larger barriers to accessing mainstream financial products than low-income non-entrepreneurs. The results indicate that financial capability plays a significant role in promoting the financial well-being of low-income entrepreneurs.

Suggested Citation

  • Baorong Guo & Jin Huang, 2023. "Financial Well-Being and Financial Capability among Low-Income Entrepreneurs," JRFM, MDPI, vol. 16(3), pages 1-10, March.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:3:p:181-:d:1091048
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    References listed on IDEAS

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    1. Robert W. Fairlie, 2020. "The Impact of Covid-19 on Small Business Owners: The First Three Months after Social-Distancing Restrictions," CESifo Working Paper Series 8581, CESifo.
    2. Johan P. Larsson & Per Thulin, 2019. "Independent by necessity? The life satisfaction of necessity and opportunity entrepreneurs in 70 countries," Small Business Economics, Springer, vol. 53(4), pages 921-934, December.
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    4. Alexander W. Bartik & Marianne Bertrand & Zoe Cullen & Edward L. Glaeser & Michael Luca & Christopher Stanton, 2020. "The impact of COVID-19 on small business outcomes and expectations," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 117(30), pages 17656-17666, July.
    5. Arping, Stefan & Lóránth, Gyöngyi & Morrison, Alan D., 2010. "Public initiatives to support entrepreneurs: Credit guarantees versus co-funding," Journal of Financial Stability, Elsevier, vol. 6(1), pages 26-35, April.
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    Cited by:

    1. Raluca Elena Narita, 2023. "Consumption of Healthcare Services in the United States: The Impact of Health Insurance," JRFM, MDPI, vol. 16(5), pages 1-16, May.
    2. Piyush Hooda & Anju Singla & Shivani Gupta, 2025. "Financial capability and financial well-being among small business owners: Does grit moderate the association?," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 30(3), pages 1-20, September.
    3. Nurul Jannah Fatehah Kamarul Zaman & Shafinar Ismail & Khairunnisa Abd Samad, 2025. "Financial Planning for Retirement among Gig Workers in Peninsular Malaysia: A Proposed Conceptual Framework," Information Management and Business Review, AMH International, vol. 17(1), pages 117-125.
    4. Kelmara Mendes Vieira & Taiane Keila Matheis & Eliete dos Reis Lehnhart, 2024. "Digital Financial Capability Scale," JRFM, MDPI, vol. 17(9), pages 1-18, September.
    5. Ayanna Stephens & Abede Jawara Mack & Priscilla Bahaw, 2025. "Unpacking the Complexities of Financial Well-being Among Entrepreneurs and Employees: It’s More Than the Money!," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 34(3), pages 627-667, August.
    6. Karla María Orozco-Orozco & Osvaldo García-Mata & Eduardo Arango-Herrera, 2024. "Financial Literacy and Financial Well-Being Among Businesspersons from Victoria, Tamaulipas, Mexico," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 19(1), pages 1-25, Enero - M.

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