IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i20p8976-d1768118.html

Digital Financial Services and Sustainable Development: Temporal Trade-Offs and the Moderating Role of Financial Literacy

Author

Listed:
  • Jihyung Han

    (Research Institute of Human Ecology, Seoul National University, Seoul 08826, Republic of Korea)

  • Daekyun Ko

    (Department of Consumer Science and Glocal Life-Care Convergence, Chungnam National University, Daejeon 34134, Republic of Korea)

Abstract

Digital financial services have transformed consumer financial behavior, yet their effects on sustainable development outcomes remain poorly understood. This study examines how mobile financial services (MFS) usage influences financial behaviors across temporal dimensions and investigates the moderating role of financial literacy from a systemic sustainability perspective. Drawing on Construal Level Theory, Dual Process Theory, and Social Cognitive Theory, we analyze data from 21,757 U.S. adults from the 2021 National Financial Capability Study to explore relationships between MFS usage, financial literacy dimensions—objective knowledge (OK), subjective knowledge (SK), and perceived ability (PA)—and both short-term and long-term financial behaviors. The results reveal a dual temporal pattern: MFS usage negatively affects short-term behaviors, including spending control and emergency preparedness, while positively influencing long-term behaviors such as retirement planning and investment participation. Financial literacy dimensions demonstrate differential moderating effects, with OK providing protective benefits against short-term risks, while PA can paradoxically exacerbate these adverse short-term effects. These findings highlight complex implications for sustainable development, demonstrating how individual behaviors aggregate to influence systemic financial resilience and progress toward Sustainable Development Goals related to poverty reduction, economic growth, and inequality reduction. Policymakers should adopt behaviorally informed regulatory approaches that address temporal trade-offs. Educators should design digital-specific literacy programs emphasizing realistic risk assessment alongside confidence-building, thereby promoting sustainable financial behaviors in increasingly digital environments.

Suggested Citation

  • Jihyung Han & Daekyun Ko, 2025. "Digital Financial Services and Sustainable Development: Temporal Trade-Offs and the Moderating Role of Financial Literacy," Sustainability, MDPI, vol. 17(20), pages 1-26, October.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:20:p:8976-:d:1768118
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/20/8976/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/20/8976/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zhong Chu & Zhengwei Wang & Jing Jian Xiao & Weiqiang Zhang, 2017. "Financial Literacy, Portfolio Choice and Financial Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(2), pages 799-820, June.
    2. David Aristei & Manuela Gallo, 2021. "Financial Knowledge, Confidence, and Sustainable Financial Behavior," Sustainability, MDPI, vol. 13(19), pages 1-21, September.
    3. Biwei Chen & Christos I. Giannikos & Jun Lou, 2023. "Is More Financial Literacy Always Beneficial? An Investigation through a Mediator," JRFM, MDPI, vol. 16(1), pages 1-10, January.
    4. Jamie Wagner & William B. Walstad, 2019. "The Effects of Financial Education on Short‐Term and Long‐Term Financial Behaviors," Journal of Consumer Affairs, Wiley Blackwell, vol. 53(1), pages 234-259, March.
    5. Kun Zhou & Jun Ye & Xiao-xiao Liu, 2023. "Is cash perceived as more valuable than digital money? The mediating effect of psychological ownership and psychological distance," Marketing Letters, Springer, vol. 34(1), pages 55-68, March.
    6. Kyoung Tae Kim & Jonghee Lee & Sherman D. Hanna, 2020. "The Effects of Financial Literacy Overconfidence on the Mortgage Delinquency of US Households," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(2), pages 517-540, June.
    7. Himanshu Sharma & Antonio Díaz Andrade, 2023. "Digital financial services and human development: current landscape and research prospects," Information Technology for Development, Taylor & Francis Journals, vol. 29(4), pages 582-606, October.
    8. Toni Mora & Francesc Prior, 2018. "The impact of mobile financial services’ usage on microfinance delinquency," Applied Economics, Taylor & Francis Journals, vol. 50(50), pages 5354-5365, October.
    Full references (including those not matched with items on IDEAS)

    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. Calvin Mudzingiri, 2024. "The Effect of Financial Literacy Confidence on Financial Risk Preference Confidence. A Lab Experiment Approach," SAGE Open, , vol. 14(2), pages 21582440241, May.
    2. Cupák, Andrej & Fessler, Pirmin & Hsu, Joanne W. & Paradowski, Piotr R., 2022. "Investor confidence and high financial literacy jointly shape investments in risky assets," Economic Modelling, Elsevier, vol. 116(C).
    3. Gerrans, Paul, 2021. "Undergraduate student financial education interventions: Medium term evidence of retention, decay, and confidence in financial literacy," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    4. Fuzhong Chen & Yingchao Fan & Guohai Jiang & Jinwei Chen, 2024. "How Overconfident Financial Knowledge Hinders Retirement Planning? Mediating Analysis and Heterogeneity of Retirement Funding Sources," SAGE Open, , vol. 14(2), pages 21582440241, April.
    5. Chhatwani, Malvika, 2025. "Girls will be girls? The gendered effect of financial overconfidence on credit card delinquency," Journal of Behavioral and Experimental Finance, Elsevier, vol. 47(C).
    6. Lin, Chien-An & Bates, Timothy C., 2022. "Smart people know how the economy works: Cognitive ability, economic knowledge and financial literacy," Intelligence, Elsevier, vol. 93(C).
    7. Kamer Karakurum-Ozdemir & Melike Kokkizil & Gokce Uysal, 2019. "Financial Literacy in Developing Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(1), pages 325-353, May.
    8. Benjamin Johnson & Tianze Sun & Daniel Stjepanović & Giang Vu & Gary C. K. Chan, 2023. "“Buy High, Sell Low”: A Qualitative Study of Cryptocurrency Traders Who Experience Harm," IJERPH, MDPI, vol. 20(10), pages 1-16, May.
    9. Cheng, Zhiming & Smyth, Russell & Zhang, Le, 2024. "Does childhood adversity affect household portfolio decisions? Evidence from the Chinese Great Famine," China Economic Review, Elsevier, vol. 87(C).
    10. Chen, Fuzhong & Hsu, Chien-Lung & Lin, Arthur J. & Li, Haifeng, 2020. "Holding risky financial assets and subjective wellbeing: Empirical evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    11. Manuel Carlos Nogueira & Luís Almeida & Fernando Oliveira Tavares, 2025. "Financial Literacy, Financial Knowledge, and Financial Behaviors in OECD Countries," JRFM, MDPI, vol. 18(3), pages 1-15, March.
    12. repec:osf:osfxxx:3fphk_v1 is not listed on IDEAS
    13. Dewi Tamara & Anita Maharani, 2024. "How Millennials Make Investment Decisions: Financial Literacy and Financial Behavior," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 70, pages 132-146, December.
    14. Vivekananda Das, 2025. "Financial Literacy and Financial Well-Being Amid Varying Economic Conditions: Evidence from the Survey of Household Economics and Decisionmaking 2017–2022," IJFS, MDPI, vol. 13(2), pages 1-39, May.
    15. Naseem Al Rahahleh, 2023. "Determinants of the Financial Capability: The Mediating role of Financial Self-efficacy and Financial Inclusion," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 15-29, November.
    16. YUVRAJ SUNECHER & Mevin Luchoo, 0000. "An investigation of the Level of Financial Literacy Among the Mauritian Population," Proceedings of Economics and Finance Conferences 14716502, International Institute of Social and Economic Sciences.
    17. Wen, Chufu & Zhao, Xinyu & Xu, Longhao & Yin, Hua, 2023. "Military experience and household stock market participation: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 86(C).
    18. repec:bjc:journl:v:12:y:2025:i:8:p:390-415 is not listed on IDEAS
    19. Julia Peter & Jana Schuetz, 2026. "Stereotypes, Financial Literacy, and Confidence: An Information Provision Experiment," CESifo Working Paper Series 12384, CESifo.
    20. Weiyao Kang & Bingjia Shao & Hongquan Chen, 2024. "What influences users’ continuance intention of internet wealth management services? A perspective from network externalities and herding," Electronic Commerce Research, Springer, vol. 24(1), pages 205-238, March.
    21. Aristei, David & Gallo, Manuela & Vannoni, Valeria, 2024. "Preferences for ethical intermediaries and sustainable investment decisions in micro-firms: The role of financial literacy and digital financial capability," Research in International Business and Finance, Elsevier, vol. 71(C).
    22. Gallego-Losada, Rocío & Montero-Navarro, Antonio & Rodríguez-Sánchez, José-Luis & González-Torres, Thais, 2022. "Retirement planning and financial literacy, at the crossroads. A bibliometric analysis," Finance Research Letters, Elsevier, vol. 44(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:gam:jsusta:v:17:y:2025:i:20:p:8976-:d:1768118. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.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.