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Financial Resilience, Financial Ignorance, and their impact on financial well-being during the COVID-19 pandemic: evidence from Brazil

Author

Listed:
  • Camila Viana Brasil

    (Universidade Federal de Minas Gerais)

  • Aureliano Angel Bressan

    (Universidade Federal de Minas Gerais)

  • Kelmara Mendes Vieira

    (Universidade Federal de Santa Maria)

  • Taiane Keila Matheis

    (Universidade Federal de Santa Maria)

Abstract

This study aims to introduce a measure of Financial Resilience for evaluating its influence on financial well-being amidst the COVID-19 pandemic. Financial Resilience, in this context, pertains to an individual's capacity to adapt, cope, and financially recover in the face of the new challenges posed by an economic downturn. We conducted a survey among 591 Brazilian citizens in 2021 and employed Structural Equation Modeling to examine the relationships between various constructs and validate our proposed measure of Financial Resilience. Our findings reveal a negative impact of the COVID-19 pandemic on Financial Resilience, resulting in heightened uncertainty and insecurity concerning individuals' financial future during this period. Notably, those with lower Financial Resilience were found to be the most financially vulnerable during the pandemic. These results provide valuable insights into the measurement of financial contingencies faced by the population and can be useful to policy and governmental strategies aimed at mitigating the social, economic, and financial repercussions of economic downturns. Fostering Financial Resilience and reducing vulnerability among lower-income individuals are critical objectives, particularly in times of economic uncertainty. While the concept of Financial Resilience is of paramount importance, the literature on this subject remains relatively nascent, with ongoing developments in measurement instruments. In this regard, our study contributes by proposing a concise measure of Financial Resilience through two simple questions.

Suggested Citation

  • Camila Viana Brasil & Aureliano Angel Bressan & Kelmara Mendes Vieira & Taiane Keila Matheis, 2024. "Financial Resilience, Financial Ignorance, and their impact on financial well-being during the COVID-19 pandemic: evidence from Brazil," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 71(2), pages 273-299, June.
    • Handle: RePEc:spr:inrvec:v:71:y:2024:i:2:d:10.1007_s12232-023-00443-6
    DOI: 10.1007/s12232-023-00443-6
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    References listed on IDEAS

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    1. Maneka Jayasinghe & Eliyathamby A. Selvanathan & Saroja Selvanathan, 2020. "The Financial Resilience and Life Satisfaction Nexus of Indigenous Australians," Economic Papers, The Economic Society of Australia, vol. 39(4), pages 336-352, December.
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    5. Esperanza Vera-Toscano & Victoria Ateca-Amestoy & Rafael Serrano-Del-Rosal, 2006. "Building Financial Satisfaction," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 77(2), pages 211-243, June.
    6. 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.
    7. Richard G Netemeyer & Dee Warmath & Daniel Fernandes & John G LynchJr. & Eileen FischerEditor & Olivier ToubiaAssociate Editor, 2018. "How Am I Doing? Perceived Financial Well-Being, Its Potential Antecedents, and Its Relation to Overall Well-Being," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 45(1), pages 68-89.
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    Cited by:

    1. Peng, Geng & Liu, Fang, 2024. "Digital inclusive finance and the resilience of households involved in financial markets," Finance Research Letters, Elsevier, vol. 69(PB).

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    More about this item

    Keywords

    Financial Resilience; Financial well-being; COVID-19 pandemic; Economic downturn;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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