Social, psychological, structural and cognitive factors to drive responsible financial consumption: roles of financial literacy and financial attitude

Abstract

This study explores how financial socialization (FS), attitude toward risk (ATR), access to financial services (AFS), and behavioral control (BC) affect responsible financial consumption (RFC), with mediating effects of financial literacy (FL) and financial attitude (FA). Among the variables, FS represents the social dimension, ATR, BC, and FA represent the psychological dimension, AFS represents the structural dimension, and FL represents the cognitive dimension. By adopting a purposive sampling method, 418 valid responses were collected from respondents who can make financial decisions independently and reside in Bangladesh, a developing economy in Asia. In terms of age, the respondents were at least 18 years old, indicating their maturity as adults. Furthermore, their occupational status ranged from being students to service holders, entrepreneurs, homemakers and retired personnel. Using partial least squares–structural equation modeling, the direct effects of the predictor variables are assessed, alongside the indirect effects of FL and FA. The results suggest that ATR, AFS and BC, along with FL and FA, are significant determinants of RFC. FS is not a significant predictor in the relationship with RFC, until mediated by FA (full mediation). The mediating effect of FL reveals partial mediation among the significant predictors of RFC. The same result is also observed in the indirect relationship of ATR, AFS and BC, with the mediating effect of FA. Built on the theories of planned behavior, social learning and human capital, it contributes to the field of behavioral finance to drive economic well-being. As it incorporates social, psychological, structural and cognitive aspects through which an individual’s responsible consumption behavior can be affected, the results add significant value to the existing literature and provide a lead to further analysis on this crucial matter of behavioral finance.