Utilizing a survey method, this research analyzed responses from 600 participants across various demographic backgrounds to assess how digital financial literacy influences financial wel
AN INTRODUCTION
Background of the study
Financial literacy plays an important role in shaping an individual's financial well- being Like many other nations, Vietnam has made financial literacy its highest priority in terms of policy Vietnam is one of the countries where 75% of the population lacks access to official financial and banking services and suffers from financial literacy according to Vietnam (2018) Moreover, A survey conducted in 140 countries by Klapper et al (2015), Vietnam was among the countries which have the lowest percentage of adults with financial literacy, lower than that of Thailand (27%), Indonesia (32%), Malaysia (36%), Myanmar (52%), Singapore (59%)…
According to Vietnam (2018), only 51% of respondents have ever heard of and know about personal loans Individuals have investments and savings, but they do not have proper, full preparation or risk management for their investments Additionally, people living in the rural, remote, mountainous areas are mostly financially illiterate; they have never even thought about budgeting and saving for their own and their family’s life
In schools and colleges, financial education is rather theoretical and non- practical Personal financial education is frequently offered on a small scale, which makes it challenging for low-income households to access Most people tend to spend their money carelessly without budgeting, planning and preparedness for unforeseen expenses At the same time they are ignorant about the concepts and types of financial products/services offered by banks and financial institutions Aside from accepting deposits and withdrawals, they do not differentiate between secured or unsecured loans, different types of insurance Concerns were raised by this situation because Vietnam's economy has grown significantly with an increasingly complicated financial market
Digital technology has revolutionized various industries, including finance Fintech (financial technology) encompasses software, mobile applications, and other technologies that enhance and automate financial processes The rapid adoption of fintech is a testament to the integration of digital technology into the financial sector.
Thanks to fintech, the public can now more easily and quickly obtain financial services People do not have to visit the bank or stand in line at the ATM to make payments or remittances because they can use mobile banking, internet banking, or e-wallet on their phones Fintech can be used for investment activities utilizing various available applications, such as Finhay, Mitrade, and many others The rapid development of digital technology-based financial products across various parts of the world is not surprising, given the facilities available
Technological development is not limited to developed countries; it is also evident in developing nations, including Vietnam Vietnam is experiencing rapid growth, with nearly 55% of the total population using smartphones and 52% using the internet Therefore, Vietnam is the Fintech industry promised land According to Asia (2024), the Vietnam Startup Report, Q1 2021, Fintech showcases an extremely good performance In recent years, the number of Fintech companies from about 40 companies at the end of 2016 to nearly 150 companies by the end of 2019 has increased rapidly in the Vietnamese market
Unfortunately, the development of digital products rapidly in the financial sector has not been accompanied by a rise in public literacy in the sector of digital finances, known as digital financial literacy One's ability to understand, analyze, manage and communicate personal financial problems (Prasad et al.) Therefore, digital financial literacy (DFL) is defined as an individual's degree of comprehension of everything associated with financial literacy through the use of digital technology
An in-depth comprehension of digital finance is crucial because, similar to other technological advancements in the financial industry, not only offer benefits in the form of convenience, speed and economy for users but also carry some risk as well These risks include data theft, loss of money, and many others Both the government as policymakers and the community as activity actors need to be fully informed about the advantages and disadvantages of this digital financial technology (Rahayu et al.)
Financial well-being is crucial to each individual as well as to society At the individual level, one of every person’s and houshold’s primary goals is to achieve financial well- being It is a determinant of quality of life When someone has financial difficulties, they are probably stressed and anxious about their income, debt, work, etc., these pressures have an impact on mental and physical health of each individual, which lowers productivity at work (Xie et al.) For instance, work is one of the first things to
12 be impacted If the worker in question feels that he is not being paid enough or is not getting financial benefits linked to achievement, then things may turn to resentment If there is not any clear indication of support or shift in business policy, the workers might quit in an attempt to find better pay elsewhere
On the societal level, according to Mitrefinch (2019), personal financial management is a key component of financial well-being When the population ages, personal financial development becomes increasingly important in lessening the social burden A population that is financially stable encourages investment, entrepreneurship, and consumption to economic stability and growth
Furthermore, specifically in Vietnam, prioritizing financial well-being also enhances retirement security, fosters innovation and entrepreneurship, and advances sustainable economic growth By recognizing and addressing the importance of financial well- being, both people and communities can work towards a future for Vietnam that is more rich, just, and strong
In the era of rapid digitalization, traditional financial literacy is insufficient Digital financial literacy equips individuals with the skills to navigate the online financial realm effectively It covers cybersecurity awareness, responsible online banking, and evaluating online institutions This skillset empowers individuals to make informed decisions, identify scams, and leverage the opportunities of the digital financial landscape The absence of digital financial literacy hinders the effective utilization of digital financial services, even for those with moderate financial literacy.
13 become an active participant in the financial ecosystem, not just a passive observer People can securely access online banking, utilize budgeting apps, and leverage digital investment platforms Understanding cybersecurity threats and data protection measures shields us from fraud and identity theft, allowing people to confidently leverage the convenience and efficiency of online financial services Personal data theft associated with illegal finance is a common occurrence This problem undoubtedly requires the attention of multiple parties, including academics, to investigate what factors influence the level of digital financial literacy It is what prompted the current research on digital financial literacy
Despite limited existing research on digital financial literacy (Setiawan et al., 2022; Rahayu et al., 2022; Choung et al., 2023), its importance remains uncontested This research gap hinders comprehensive understanding and highlights the need for further exploration of this critical topic.
Research objectives and research questions
This study aims to understand mechanism through which the digital financial literacy (DFL) impacts financial well-being in Vietnam
Therefore, our research questions are:
1 To what extent DFL impact financial well – being in Viet Nam?
2 What mechanism through which DFL impact financial well – being in Viet Nam?
Research method
A survey method was performed in this study, and 600 millennial generations aged 16–
55 years from several cities in Viet Nam participated in this study The Structural Equation Model using SmartPLS was employed to analyze the data concerning the relationship of the latent variable.
Research findings
This research contributes to the extension of the knowledge about digital financial literacy and the role of financial behaviors in mediating between digital financial literacy and financial well - being in Viet Nam Especially, the research indicates that digital saving behavior, digital spending behavior and digital investment behavior, financial self-efficacy has a mediator effect between digital financial literacy and financial well - being Interestingly, the research also shows that there is a stronger impact of digital finance literacy on financial self-efficacy and digital saving behavior than digital investment behavior and digital spending behavior However, there is no clear result that shows the direct effect from digital financial literacy and financial self- efficacy toward financial well - being.
Structure of the study
Our paper is divided into 5 main parts After the introduction, the chapter 2 review the literature, provide theoretical background, and develop hypotheses to form the framework of the study In Chapter 3, we present research method In chapter 4, we analyze data and research findings In chapter 5, we perform discussion, conclusion, limitation of the research
LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT
Digital financial literacy
2.1.1 Definition of digital financial literacy
Digital financial literacy can be defined as a person’s capacity to understand, manage, evaluate, and explain financial issues related to online purchasing, online payment through a variety of models, and online banking systems (Prasad et al., 2018) Digital financial literacy contains the knowledge, skill, and comprehension necessary for individuals or organizations to effectively access, evaluate, and utilize digital resources in handling finances in a digital environment, including the ability to access and use financial products and services (Setiawan et al., 2022) In the absence of a standardized definition Andreou and Anyfantaki (2021) understand digital financial literacy to be the intersection of digital proficiency and financial literacy It allows people to maintain their financial wellbeing by using digital financial products and services in a responsible and effective manner Moreover, digital financial literacy can also be influenced by social traits or social standing These social traits, which include socioeconomic conditions, age, income and education (Setiawan et al., 2022)
In 2020, Liew et al (2020) explained that digital financial literacy can be developed on four main dimensions including digital knowledge, digital experiences, digital awareness, and digital skills Digital knowledge can be referred to as understanding digital technologies, tools, and resources and being able to use them to make financial decisions This encompasses the ability to use digital platforms and devices to access, analyze, create, and share financial data (Lyons et al., 2021) Angeles (2022) expressed digital experiences as interactions, engagements, and full encounters via digital platforms in order to provide financial services They discussed how people use digital tools like social media, smartphone apps, and websites in a comprehensive way Digital awareness describes an individual’s awareness, comprehension, and expertise of the financial digital world, encompassing its technology, potential risks, opportunities, and impact on various aspects of life It requires understanding digital tools, resources, and platforms in addition to being conscious of drawbacks and problems associated with digital financial technology (Setiawan et al., 2022) Digital skills are the knowledge and abilities required to effectively use financial digital technologies, tools and resources They contain a variety of skills that enable individuals to investigate, engage, produce, and solve issues in the digital financial world (Kumar et al., 2023)
2.1.2 Importance of digital financial literacy
Digital financial literacy is the term for the traditional definition of financial literacy that has been digitally transformed (Qamar et al., 2023) Lyons et al (2021) stated that digital financial literacy is “financially literate on digital platforms,” which combines digital literacy and financial literacy Measurements of both digital and financial literacy are used to gauge digital financial literacy (Ravikumar et al., 2022) Therefore, Financial literacy is referred to as DFL in digital financial technology (Setiawan et al.,
With the conventional model of financial literacy shifting into the digital era, the impact of digitalization on financial literacy is profound Even if you are financially savvy, a lack of digital literacy will expose you to online vulnerabilities Cubides and O’Brien (2022)’s survey found that credit cards accounted for 28% of all payments made So, using digital platforms to conduct financial transactions of all kinds has become not only easy but also normal
According to Prasad et al (2018), digital financial literacy is very crucial in the modern world as we know that now all financial services and products are now offered digitally The significance of digital financial literacy becomes apparent, particularly in the wake of demonetization The rapid advancements in digital payment systems and global revaluation of mobile communications are creating opportunities to connect poor households to reliable and reasonably priced financial tools via mobile phones and other digital interfaces The unbanked can now access services that were previously unavailable to them out of reach
2.1.3 Prior studies on digital financial literacy
DFL is influenced by a variety of factors First demographic factors, including age, gender, marital status, education level, social groups, religion, profession, family size, and economic status are significantly related to digital financial literacy Tailored financial training programs considering these factors can enhance digital financial literacy, especially in rural areas of India (Azeez N.P et al., 2022) Second, knowledge about digital financial products and services, potential risks, control over these risks, and consumer rights is crucial for developing digital financial literacy Raising awareness about digital fraud, technical failures, and consumer rights in financial services is essential for managing financial resources effectively in the digital world
(Prykaziuk & Khodakivska, 2023) Third, increased use of fintech has led to the recognition that digital literacy is as crucial as traditional literacy skills in the digital economy This calls for targeted digital literacy training and educational opportunities (Golden & Cordie, 2022) Fourth, different generations exhibit varying levels of digital financial literacy For example, generational disparities between Generation Z and Millennials in their use of financial technology facilities and services have been documented, underscoring the need for generation-specific financial education programs (Sembel & Deliyana, 2023) Fifth, cultural and social influences: Cultural attitudes towards technology and finance can also affect digital financial literacy Community norms and the influence of peers and family on digital and financial practices play a role in shaping one's proficiency in digital financial matters (Adnan et al., 2023)
DFL brings several benefits First, individuals with digital financial literacy are better equipped to make informed financial decisions, leveraging digital platforms for personal finance and digital payments The integration of financial and digital literacy is essential for accessing digital financial products and markets, even in the absence of financial literacy (Lo Prete, 2021) Second, digital financial literacy plays a critical role in promoting financial inclusion and resilience, especially in vulnerable populations in South Asia and Sub-Saharan Africa Financial and digital literacy are key to building inclusiveness and enhancing savings, borrowing, and risk management behaviors (Lyons et al., 2020) Third, there is a strong association between digital financial literacy and the use of digital payment tools and platforms Individuals with higher literacy levels are more likely to adopt and benefit from digital financial products (Lo Prete,
2021) Fourth, knowledge of digital financial services enables individuals, especially in developing countries, to participate more fully in the economy This includes leveraging digital platforms for entrepreneurship and access to broader markets, thereby contributing to economic growth and personal financial improvement (Gosal & Nainggolan, 2023) Fifth, enhanced digital financial literacy helps individuals understand potential digital financial risks, such as fraud and technical failures, and provides them with the knowledge to take protective measures This understanding is critical in a digital age where online security risks are prevalent (Prykaziuk & Khodakivska, 2023)
Definition of financial literacy
According to the Organisation for Economic Co-operation and Development (OECD,
2013), financial literacy is defined as “A combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing” Moreover, financial literacy also categorized in 5 main categories: (1) knowledge of financial concept, (2) communication ability about financial concepts, (3) ability to handle personal finances, (4) the ability to make appropriate financial decisions and (5) confidence in planning effectively for future financial needs (REMUND, 2010) Additionally, Steven T Mnuchin (2019) defined financial literacy as “Financial literacy describes the skills, knowledge and tools that equip people to make individual financial decisions and actions to attain their goals; this may also be known as financial capability, especially when paired with access to financial products and services''
Financial literacy is a crucial life skill that is necessary for all facets of maturity (Moreno-Herrero et al., 2018) This is because financial literacy also enhances individuals' knowledge about finance and enlightens them significantly in their lives and encourages them to evaluate products and make wise decisions (Mireku et al., 2023) Additionally, Mireku et al (2023) also concluded that the students who have a strong understanding of finance are more likely to have better financial behavior From this knowledge, financial literacy also enhances the participation of individuals to financial markets, such as the stock market, commercial insurance and online financial products (Liu et al., 2023).
Financial well-being
2.3.1 Definition of financial well-being
Financial well-being is defined financial well-being as a state of financial health Garman et al (1999) It includes contentment with material and non-material aspects of one's financial condition, sense of financial stability, including financial resource sufficiency, and material and non-material financial resources that each individual possesses Moreover, financial well-being is also defined as the sense of being able to maintain current and expected ideal living standards as well as financial freedom (Brüggen et al., 2017) The financial well-being idea is defined as a scenario in which a person can regulate his finances to meet requirements and pay obligations at this time
19 or that will occur in the future to provide financial security or financial flexibility in making choices in enjoying life (Bureau, 2015) Financial well-being can be acquired when all expenses are fulfilled and there is still money left over; finances can be regulated, and people feel safe about their financial situation (both now and in the future) (Muir et al., 2017) Studies have shown that financial well-being is a key determinant of life satisfaction and has greater predictive power than objective financial measures (Netemeyer et al., 2017)
2.3.2 Importance of financial well-being
Financial well-being allows individuals to meet their current and future financial obligations (Bureau, 2015) This includes covering basic needs, paying bills on time, and managing unexpected expenses Financial well-being is also a key determinant of the overall quality of life Adequate financial resources enable individuals to meet their basic needs, pursue educational goals, and enjoy leisure activities The Organization for Economic Co-operation and Development (OECD) highlights the correlation between income and life satisfaction, emphasizing the role of financial well-being in enhancing the overall quality of life (van Zanden et al., 2020) By securing financial stability, individuals can afford a comfortable lifestyle and plan for their future, fostering a sense of fulfillment and contentment On a broader scale, the financial well-being of individuals contributes to the overall economic health of communities and nations A financially stable population is more likely to participate in economic activities, such as spending, saving, and investing This, in turn, stimulates economic growth and stability The International Monetary Fund (IMF) emphasizes the role of individual financial well-being in supporting broader economic development (Riad & El Barasse, 2019).
Prior studies on relationship between DFL and FWB
2.4.1 Digital financial literacy and financial well-being
Financial literacy, the ability to comprehend and utilize financial concepts, holds significant influence over individuals' financial stability By grasping financial principles, individuals gain the competence to make well-informed decisions regarding budgeting, accumulating savings, and investing wisely (Setiawan et al., 2022).
In a previous study by Oquaye et al (2020) found that financial knowledge and behavior have a positive effect on financial well-being Moreover, an increasing number of financial services are only available and provided through digital channels as digital finance develops (Lyons et al., 2021; Lyons & Kass-Hanna, 2022) Financial customers
20 must possess the necessary skills and understanding to utilize digital financial services in the present fintech environment and assume more financial responsibility (Morgan
& Trinh, 2019) In the previous study by Lyons and Kass‐Hanna (2021), attaining financial well-being is contingent upon possessing not just financial knowledge but also digital skills and the capacity to handle financial affairs on digital platforms
Nowadays everyone tends to use online services such as saving, spending, and investment because in today’s digital world, a high degree of financial literacy must be followed by skills in using digital financial services and products to effectively maximize FWB (Jhonson et al., 2023) Thus, we hope Vietnamese people can use digital financial technology to maximize their FWB
The research by Jhonson et al (2023) found that DFL had a direct impact on FWB The mediating variables such as saving behavior, spending behavior, and investment behavior influenced the relationship between DFL and FWB In other words, this research found how DFL affects FWB through saving, spending, and investment behavior
All of the results regarding the impact of DFL on FWB through saving, spending, and investment in this research were supported by previous studies from Chavali et al
Financial behavior significantly impacts individuals' financial well-being Chavali et al (2021) concluded that saving, investing, and spending habits influence financial well-being in India Similarly, Iramani and Lutfi (2021) found that financial behavior, particularly saving, investment, and shopping, mediates the relationship between household financial welfare and financial literacy in Indonesia Moreover, Muhammad Arsalan et al (2021) emphasized the role of financial behavior in shaping economic outcomes.
(2021) showed through research on 318 people in Pakistan that the financial literacy and investment behavior have a positive relationship with financial well-being, and investment behavior serves as a mediating variable to enhance this relationship The findings of Jhonson et al (2023)’s research showed that the positive impact of DFL on FWB will be enhanced when we have better saving behavior In other words, “the better the saving behavior, the better effect of DFL on FWB”
The results of Jhonson et al (2023)’s research also pointed out a person’s DFL level mediates spending behavior, which in turn influences financial security Similar to saving behavior, “the better influence of DFL on financial well-being will follow better spending behavior”
The same finding was revealed in investment behaviors, as mediation influenced the relationship between DFL and FWB in this research
The last findings of this research indicated that DFL had a positive impact on the FWB in Indonesia To put it another way, “it can be concluded that the better a person’s DFL, the higher the result on FWB” This result was consistent with the research of Rahayu et al (2022) on respondents from West Sumatra, Indonesia
In 2023, there was a research by Choung et al (2023) with the title: “Digital Financial Literacy and Financial Well-Being” They have found that there was a link between digital financial literacy and financial literacy which the association is mainly due to financial knowledge and the ability of users to protect themself against digital frauds
Moreover, the research by Bruhn and Love (2014) have indicated that digital finance can enhance the level of financial inclusion and help alleviate poverty Research suggests that digital and financial literacy are associated with resilient financial behaviors, as measured by risk management and precautionary savings (Lyons et al.,
2021) Improving DFL can increase access to mobile finance, perhaps leading to favorable financial behaviors such as transferring from informal to formal savings channels (Aron, 2018) The study also emphasizes how avoiding digital fraud can improve financial well-being and indicates that increasing the ability to identify fraudulent transactions can increase the overall financial well-being
The research also shows that DFL had a significant impact on financial well-being compared to financial knowledge Financial knowledge is important, but DFL adds the ability to use that knowledge in a digital environment This includes things like using budgeting apps, online banking, and understanding security measures Thus, financial knowledge is still a foundation But DFL bridges the gap between knowing and doing in the digital age of finance
2.4.2 Financial behavior and financial well-being
According to Bhargava et al (2022), financial behavior is connected to people’s choices, actions, and routines about the allocation, utilization, and management of financial resources Financial behavior is influenced by a variety of factors, including cultural standards, social and economic contexts, personal ideas, attitudes, and values (Qudah et al., 2022; Sabri et al., 2021) It highlights how individuals establish their
22 financial objectives and make choices that lead to financial well-being (Aryan et al., 2022; Kusnayain et al., 2023)
Financial behavior comprises three dimensions, including saving behavior (Sharna & Sarma, 2022), which involves allocating and growing financial resources for future needs On the other hand, spending behavior encompasses decisions and actions related to utilizing financial resources to acquire goods and services, reflecting individual choices and habits (Ogunlusi & Obademi, 2019).
Theory background
Theory of reasoned action, the level of intention to implement and the ability to implement the intention will be higher due to the connection between attitude and subjective standards (Ajzen & Fishbein, 1975) However, Ajzen (1991) introduced a new concept that brings multiple advantages in predicting and explaining an individual's behavior in a certain context of the Theory of reasoned action called Theory of Planned Behavior
Figure 1: Theory of planned behavior
Intentions arise from the interplay of attitudes, popular opinions, and behavioral control factors and control beliefs include reviewing the internal and external elements that could obstruct or encourage the behavior (Ajzen & Fishbein, 2005) It strengthens the Theory of reasoned action and makes the argument that an individual's desire to perform an action depends on five determinants: 1 attitudes towards behavior illustrate that
26 people's evaluation of their own behavior in terms of its positivity or negativity 2 Subjective norms pertain to the social elements that exert pressure and exert influence on individuals in determining whether to exhibit or not exhibit, approve or disapprove of a specific behavior 3 Behavioral intention is the term used to describe the motivating elements that impact a certain conduct The more strongly one intends to carry out a behavior, the more probable it is to be carried out 4 Social norms are the accepted standards of conduct within a community, among individuals, or within a broader cultural setting 5 Perceived behavioral control - This refers to a person's perception of the ease or difficulty of performing the behavior This perception is subject to variation across diverse situations and actions, leading to fluctuating assessments of behavioral control contingent upon the specific context It is considered one of the most widely applied and cited behavioral theories (Cooke & Sheeran, 2004) and has been used in many different fields such as education, management, finance, environment and economics The TPB is commonly used to investigate various aspects of consumer financial behavior, such as financial literacy, money management, saving intentions, and decision-making (Magendans et al., 2017)
The TPB has been widely used by previous researchers to link the level of financial literacy and financial behavior, such as Lajuni et al (2018), Kamel and Sahid (2021) and Song et al (2023) their research demonstrates that financial literacy significantly influences the financial behavior among individual investors
In this study, TPB was employed to investigate the relationship between digital financial literacy and financial behavior If people have a favorable attitude towards finances they will be self-responsible and desire saving, investing, and future planning (Normawati et al., 2021) Therefore, Individuals' digital financial literacy influences their spending, saving, and investing habits (Rahayu et al., 2022)
However, due to the limited number of studies about digital financial literacy, and on the other hand, there have been many studies about the relationship between financial literacy and financial behavior, so this study tries to rely on these studies to explain the relationship between the level of digital financial literacy and financial behavior Through the studies by Setiawan et al (2022), Lyons et al (2021) states that the impact of digital financial literacy on financial behavior should be the same as the impact of financial literacy
According to social cognitive theory, human behavior is intricately influenced by a combination of cognitive processes, personal factors, and environmental elements A prominent proponent of this theory, (Bandura, 2006), defines "perceived self-efficacy" as individuals' beliefs regarding their capacity to achieve specific levels of performance that can exert influence over events impacting their lives This concept posits that self- efficacy beliefs play a pivotal role in shaping how individuals experience emotions, form thoughts, self-motivate, and behave
Essentially, an individual's confidence in their ability to perform a particular behavior is crucial, and this confidence is intricately linked with the perceived outcomes or consequences of that behavior Bandura emphasizes that individuals must not only believe in their capability to execute a behavior but also place value on the expected outcomes, whether they be immediate benefits or long-term advantages
In the context of behavior change, self-efficacy emerges as a key determinant Bandura's assertion that self-efficacy beliefs significantly influence behavior underscores the idea that individuals are driven by their own self-perception and confidence Ozmete and Hira (2011) go further to assert that self-efficacy is not merely an influential factor but is, in fact, the single most important characteristic that guides individual behavior changes
Therefore, within the framework of social cognitive theory, the intricate interplay between cognition, personal factors, and the environment is encapsulated by the concept of perceived self-efficacy This psychological construct serves as a linchpin in understanding how individuals perceive their ability to enact behaviors, the value they attribute to the anticipated outcomes, and ultimately, how these factors shape their thoughts, motivations, and actions
Self - efficacy is one of the most crucial factors determining behavior change in individuals because every single action of an individual is driven by their self- perception and confidence (Ozmete & Hira, 2011) Therefore, the social cognitive theory was employed to illustrate the mediating effect of financial self - efficacy on the
28 relationship between digital financial literacy and financial well-being through financial behavior
After analyzing the two theories above, we can see that financial behaviors, including digital saving, digital spending, and digital investment, are all based on Social Proof Theory and the Theory of Reasoned Action It can be observed that financial investment based on the actions of others is more influential through the social environment among individuals, social media platforms, or forums This is also referred to as the Subjective Norm (SN), which has been studied through various theories such as the Theory of Planned Behavior (TPB) or the Theory of Reasoned Action (TRA).
Hypothesis development and conceptual framework
2.6.1.1 Digital financial literacy and financial well-being
According to OECD 2022, DFL is defined as a combination of knowledge, abilities, attitudes, and behaviors that enable people to be aware of and safely use digital financial services and digital technology in order to improve their financial well-being Possessing DFL empowers individuals to understand complex financial concepts and products offered through digital platforms This knowledge fosters confidence in managing their finances, enabling them to make informed decisions and avoid potentially risky ventures (Lyons et al., 2021)
According to a study conducted on respondents from West Sumatra, Indonesia, by Rahayu et al (2022), DFL is assessed based on four factors (understanding, experiencing, knowing, and awareness of financial products and services), and has a significant and favorable influence on FWB Indra et al (2022) study on the impact of DFL on the financial well-being of SMEs also observed a positive significant impact H1: DFL is positively associated with FWB
2.6.1.2 Mediating role of digital saving behavior on the relationship between DFL and FWB
Rahayu et al (2022) found out that there was a relationship between DFL and financial behavior Simultaneously, they also pointed out that DFL has a positive effect on financial behavior as: saving behavior among millennials in Indonesia Additionally, in
Johann and Dewi (2023) ’s research, they also specifically pointed out that if an individual has good digital financial literacy, he/she may have better saving behavior Moreover, in the study of Gutter and Copur (2011) found that students who budgeted and saved reported significantly higher financial well-being scores than those who did not budget or save Furthermore, this statement was also supported by Jhonson, Andriani, Noviana, and Tamara that they pointed out that saving behavior is critical for achieving higher financial well-being among Malaysian women working in the public sector A recent research about this topic by Setiawan et al (2022) showed that individuals who lack DFL may struggle to make informed financial decisions when using digital platforms for saving Overall, for that reason, it is important to understand the influence of DFL toward personal saving behavior and financial well – being H2: DFL positively influences financial well-being through digital saving behavior
2.6.1.3 Mediating role of digital spending behavior on the relationship between DFL and FWB
The mediating role of spending behavior in the relationship between digital financial literacy (DFL) and financial well-being (FWB) is an area gaining considerable attention in the field of financial research Digital financial literacy equips individuals with the knowledge and skills necessary to use digital financial services effectively, which directly impacts their financial behaviors, including spending and saving, and ultimately influences their overall financial well-being
Research by Setiawan et al (2022) on Indonesian millennials reveals that higher levels of digital financial literacy positively influence both saving and spending behaviors, which in turn are predicted to affect the foresight of future financial behaviors This suggests that an enhanced understanding of digital financial tools can lead to more informed and controlled spending, thereby potentially increasing an individual's financial stability and satisfaction
Additionally, Ma et al (2022) explore how financial literacy influences household consumption patterns, highlighting that digital finance tools can mediate the impact of financial literacy on consumption decisions This indicates that digital financial literacy might directly influence spending behaviors by providing tools that facilitate better financial decision-making, thus indirectly enhancing financial well-being
H3: DFL positively influences financial well-being through digital spending behavior
2.6.1.4 Mediating role of digital investing behavior on the relationship between DFL and FWB
The relationship between digital financial literacy (DFL) and financial well-being is increasingly recognized as critical, particularly when considering the mediating role of investment behavior Research such as that conducted by Shankar et al (2022) suggests that financial knowledge and behavior play significant roles in mediating financial literacy and fragility, thereby impacting financial well-being Further exploring this theme, Bai (2023) identifies the mediating role of investment decision-making in the cognitive framework of financial literacy, suggesting that informed financial decisions directly contribute to improved financial outcomes (Bai, 2023) Kumar et al (2023) also emphasize the sequential mediation of digital financial literacy and capability in financial decision-making, underscoring the importance of autonomy and skills in achieving financial well-being (Kumar et al., 2023) These studies collectively highlight the critical role of investing behavior as a mediator in the pathway from digital financial literacy to financial well-being, suggesting that enhancing digital financial competencies can lead to more informed and beneficial financial behaviors and, ultimately, greater financial security and satisfaction
H4: DFL positively influences financial well-being through investment behavior
2.6.1.5 Digital Financial Literacy and Financial Self-efficacy
Acquiring financial literacy, encompassing knowledge, skill, confidence, and competencies, empowers individuals to make sound financial decisions and effectively use digital financial products This promotes financial self-efficacy, leading to greater financial well-being Digital financial literacy, specifically encompassing digital awareness, experience, and skills, plays a crucial role in this process Financially aware individuals are equipped to make informed financial choices, enhancing their sense of financial self-efficacy and ultimately contributing to higher financial well-being.
31 financial awareness is due to lack of financial literacy So, no or limited digital financial awareness will result in low financial self-efficacy and thus a low level of financial well-being
Digital experience and financial behavior influence an individual's digital financial knowledge, enhancing their financial literacy and leading to financial competency (Moore, 2003) This increased financial competency fosters financial self-efficacy, improving financial well-being Essential components of financial literacy include budgeting, saving, borrowing, and investing, emphasizing the crucial ability to manage money effectively (REMUND, 2010) Moreover, enhanced digital skills contribute to diverse financial usage (Hargittai and Hinnant, 2008; Robinson et al., 2015) The review of digital inequality literature highlights that Internet use intensity and related digital abilities positively impact financial resource generation, such as higher earning potential through social media's intermediary role in job searches Thus, digital financial skills enable individuals to develop financial self-efficacy, enhancing their overall financial well-being.
On the basis of all the literature discussed above combined with the finding of Lone and Bhat (2022) that financial literacy which includes financial awareness, financial experience, and financial skill has significant positive impact on financial self-efficacy, the following hypothesis is proposed:
H5: DFL positively influences Financial self-efficacy
2.6.1.6 Financial Self-efficacy and financial well-being
Financial self-efficacy is proven to have a significant positive association with financial well-being According to the data, someone who has confidence in their financial knowledge as well as the ability to attain their financial goals will have a high level of financial well-being (Vosloo et al., 2014) Furthermore, financial self-efficacy is believed to reinforce responses to difficult current events by keeping people motivated to overcome hurdles (Kammeyer-Mueller et al., 2009) As a result, financial self- efficacy should have a positive relationship with financial well-being According to Oquaye et al (2020), persons with high self-efficacy will engage in responsible and controlled financial conduct in support of financial well-being Furthermore, it is considered that financial self-efficacy evokes a disciplined behavior to attain long-term
32 financial goals (Chowdhry & Dholakia, 2019) People with low self-confidence expect less gain from their present efforts and have less patience with financial difficulties (Andreou & Anyfantaki, 2021) As a result, fewer financial objectives are met, and lower-quality financial decisions are obtained (Kuhnen & Melzer, 2016) Furthermore, people with a high level of financial self-efficacy believe that financial decisions based on financial knowledge will eventually help them guarantee their financial future (Netemeyer et al., 2017)
H6: Financial Self-efficacy positively influences financial well-being
2.6.1.7 Mediating role of self-efficacy on the relationship DFL and FWB
The concept of self-efficacy, particularly in financial matters, plays a significant role in mediating the impact of digital financial literacy on financial well-being This is grounded in the understanding that confidence in one's financial capabilities can significantly affect financial behaviors, leading to improved financial outcomes
RESEARCH METHODS
Survey design
The survey, or questionnaire is a collection of inquiries intended to identify patterns among different events One of the survey’s most obvious features is collection of data from multiple events at one time (Bell et al., 2022; De Vaus, 2001) One of the most advantages of the survey lies in its affordable prices to gather data within a relatively short time period If the questionnaire is not carefully designed and administered, the main problem is that of respondents’ misinterpretation (Johnson & Turner, 2003). The survey comprises different stages Identifying the problems that the research will take a look at is the first step At this point, the study’s main concepts are made clear before development of hypotheses and the creation of a conceptual framework After that, a pilot test is advisable to make sure that the questionnaire is in the best quality concerning its content, its length, and its understandability to reach respondents The same plan, which comes next, allows the researcher to identify a study’s minimal sample size before the questionnaire is formally sent to a significant number of participants Before implementing certain processes or techniques of data analysis, the data must first be cleaned Then, research findings are drawn (Bell et al., 2022; De Vaus, 2001).
Importantly, we analyzed the PLS -SEM survey data using SmartPLS software, which will be discussed in the following sections.
Questionnaire design and pilot test
The questionnaire was designed to collect information about different aspects of people's digital financial literacy, addressing some of the financial problems in Vietnam To maximize the validity of the measures and allow comparisons between study results and prior study, construct measures were adapted from other investigations (Blair et al., 2013; Bradburn et al., 2004; Van der Stede et al., 2006) The questionnaire comprises six sections: Demographic, Digital Financial Literacy, Financial Literacy, Digital Financial Behavior (including Digital Saving, Digital Spending, and Digital Investing behavior), Financial Self-Efficacy, and Financial Well-Being (See Appendix
1) The questionnaire was designed to make sure that all the question items are clear and understandable to respondents
This section is designed to collect basic information of respondents, including gender, income, education level, occupation, use of online applications for saving, investing or spending This allows researchers to paint the most comprehensive picture of respondents.
This section collects information on aspects of digital financial literacy such as knowledge, awareness, experience, and skills
In this section we try to ask basic financial calculation questions to determine people's understanding of finance
In this section, we examine people's capacity to manage their finances and determine whether or not they have trouble coming up with solutions to financial problems We do this by asking them questions regarding their confidence in their ability to handle their finances.
This section collects digital finance behaviors such as digital saving, digital spending, and digital investing to examine how digital behaviors will indirectly impact on the relationship between digital financial literacy and financial well-being
This section tries to collect information about the components of financial well-being such as being able to handle unexpected expenses, protecting future finances, etc.
The questionnaire was initially designed in English, and then translated into Vietnamese via the back-translation technique (Usunier, 1998) This questionnaire was first translated into Vietnamese and then the Vietnamese version was converted into English by our research team After that, two versions of the questionnaire are compared, and
38 the Vietnamese version’s wording is altered to ensure that every question item’s meaning is accurate (Harkness et al., 2010).
A pilot test was conducted to enhance questionnaire comprehensibility The research team sought feedback from relatives to identify and correct spelling errors and expressions Through this feedback, particularly from potential respondents, the questionnaire's quality was significantly improved.
Sample and data collection
The research sample was taken from all people living in Vietnam with ages ranging from 16 to 50 years old The questionnaire was sent by the research team via social networking platforms such as Facebook, Zalo, Instagram with a cover letter clearly stating the purpose of the research, and ensuring the anonymity of respondents Follow- up was conducted after the first questionnaire was sent out This resulted in 594 usable research responses.
Measurement
The multi-item scale was used to measure the constructs of the study on the influencing factors that influence the relationship between digital financial literacy and financial well-being In other words, each construct of the study is measured by a set of items, and each item is a unique statement that should be rated on a five-point Likert Scale (Bell et al., 2022) Table 3.1 presents measures of all constructs of the study
Table 3.1: Questionaire of the research
I have a good understanding of digital payment products such as E-Debit, E-Credit, E-Money, Mobile/Internet Banking, E-wallet
(Setiawan, Effendi et al 2022); (Abdallah, Alsharif et al
I have a good understanding of product digital asset management
I have a good understanding of digital alternatives
I have a good understanding of digital insurance such as OPES, motorcycle insurance
I have a good understanding of customer rights and protection as well as the procedure to complain about the service from digital financial providers
I have experience in using the product and service of fintech for digital payment such as Momo, Zalo Pay, Shopee Pay, Internet Banking…
I have experience in using products and services of fintech for financing (loan) and investment such as Finhay, Momo, Viettel Pay,
I have experience in using the product and service of fintech for asset management
I have awareness about the potential of financial risk in using digital financial provider or fintech, such as the legality of the fintech provider, interest rate and transaction fee
I am aware of the potential risks associated with sharing personal and financial information online, such as phishing scams or identity theft
I have a good capability in managing financial activities through a digital platform such as managing the cost of using digital financial transactions
I have a good control on financial activities using
41 digital platforms by evaluating the spending in the platforms
Suppose you have 1 million VND and a bank's interest rate is 4% peryear If you deposit this money in the bank for 1 year, how much (the principal and interest earned) will you have in 1 year times
Which investment do you think is riskier in general when you buy a stock or equity funds?
Never heard of "equity funds" 5 Never heard of either
To determine the real value of your savings over time, it's crucial to consider both interest rates and inflation In this case, with an annual interest rate of 5% and an inflation rate of 3%, the effective interest rate is 2% (5% - 3%) Consequently, if you deposit 1 million VND, after 1 year, the purchasing power of your money will be approximately 1,020,000 VND, representing a nominal gain of 20,000 VND However, due to inflation, the actual value of your savings will have increased by only 18,000 VND (1,020,000 VND - 1,002,000 VND), meaning that your money will have less buying power than before.
1 More than you could buy a year ago
2 The same as you could buy a year ago
3 Less than you could buy a year ago
I confidence in my ability to manage my finances
I can stick to my spending plan when unexpected expenses aries
When faced with a financial challenge, I have a hard time figuring out a solution
I have a preference to choose shopping using digital platform (Shoppee, lazada, etc.) than the conventional platform (traditional market, supermarket, mall, etc.)
I choose shopping using digital platforms for leisure and enjoyment
I pay my my bills (electric, tuition fee, etc ) through digital payment products
I have a routine shopping using e-commerce
I have perception of independent of financial management using digital financial platform for saving
(Setiawan, Effendi et al 2022); (Abdallah, Alsharif et al
I have a regular savings using digital financial products
I am satisfying for saving using digital financial products
I am comfortable with my current level of saving which fulfils unexpected expenses emergencies if will occur
I buy bonds, stocks, mutual funds or long-term investment through investment application
(Oquaye, Owusu et al 2020); (Furinto,
I feel that investing using digital applications is quite safe to do, such as the secruit of money, data, and so on
I get optimal benefits by investing through digital invenstment application
I can handle my a major unexpected expenses
I am securing my financial future
I can enjoy life because of the way I am managing my money
I am concerned that the money I have or will save will not last in the long run
Data analysis with PLS-SEM using Smart PLS
The features of data were first examined using descriptive statistics, and then inferentially using the structural equation modeling (SEM) technique, particularly partial least squares structural equation modeling (PLS-SEM), to take a look at the predicted relationships among the study constructs It has been determined that SEM is particularly helpful
PLS-SEM is a type of multivariate regression technique that allows researchers to simultaneously analyze complex model interactions (Afthanorhan, 2013), which makes it more suitable for studies such as this one that involve latent or unobserved variables (Astrachan et al., 2014) PLS-SEM also allows researchers to look at correlations between multiple dependent variables and multiple independent factors simultaneously
(Hair et al., 2012) The two phases of Smart-PLS data analysis process are the measurement model and the structural model, which are both covered in detail in the sections that follow:
The measurement model initially examines the unidirectional relationships between items measuring a single construct, with the ultimate goal of assessing construct validity and reliability Measure reliability reflects the internal consistency of construct items, and is assessed using Cronbach's alpha or composite reliability A measure is considered reliable if its Cronbach's alpha is 0.7 or greater, or if its composite reliability exceeds 0.708.
In assessing model validity, various indicators are employed Fornell and Larcker (1981) suggest that convergent validity is established when the average variance extracted (AVE) exceeds 0.5 Discriminant validity is confirmed when the square root of each construct's AVE surpasses its highest correlation with any other construct in the model Additionally, exterior loadings below 0.4 should be excluded from the model to ensure reliability (Chin, 1998; Hulland, 1999).
In the next stage, the model’s hypotheses are tested using the structural model, also known as the inner model At this point, the primary criterion for evaluating the impact of exogenous latent variables on endogenous variables is the determination coefficient (R2) T-statistics are calculated and used to analyze the measurement and structural models' significance levels According to Hair et al (2012), statistical significance of the hypotheses under examination is indicated by T-statistics larger than 1.96
DATA ANALYSIS AND RESEARCH FINDINGS
Descriptive statistic
Table 4.1 in the provided document reveals the gender distribution of survey respondents Out of the 594 individuals who participated, there was a noticeable disparity between the number of males and females Males constituted a majority with
375 respondents, accounting for 63.1% of the total Females, on the other hand, were
219 in number, representing 36.9% of the survey participants
Table 4.1: Gender of survey’s respondents
Table 4.2 presents the age of the group survey’s respondents It is clearly seen that the number of 16-20 and 21-25 account for the majority of respondents While the figure for 26 - 30 age and above 30 ages is only 8% and 11%, respectively
Table 4.2: Age of survey’s respondents
Table 4.3: Living location of survey’s respondents
Tables 4.3 and 4.4 provide insights into the living locations and education levels of the survey's 594 respondents In Table 3.3, a majority of the participants, 401 (67.5%), reported living in the city, while the remainder, 193 (32.5%), live in the outskirts The education level data in Table 3.4 shows that most respondents are undergraduates, with
523 (88%) at this level Postgraduates and high school graduates are comparably few in number, representing 6.1% (36 respondents) and 5.9% (35 respondents) of the survey population, respectively
Table 4.4: Education level of survey’s respondents
Education Level Frequency Percent Valid
Table 4.5 offers a detailed view of the income distribution of the survey's respondents
A substantial portion, 482 individuals or 81.1%, have an income below 5 million VND The data suggests a sharp decrease in frequency as income ranges increase, with 44 respondents (7.4%) earning from 5 million to 10 million VND, and 37 respondents
(6.2%) earning from 10 million to 20 million VND Only a small fraction, 3 individuals (0.5%), report incomes ranging from 20 million to 30 million VND, and slightly more,
28 respondents (4.7%), have incomes above 30 million VND
Table 4.5: Income of survey’s respondents
From 5 million to 10 million VND 44 7.4 7.4 88.5
From 10 million to 20 million VND 37 6.2 6.2 94.7
From 20 million VND to 30 million VND 3 0.5 0.5 95.3
In Table 4.6, the occupation of the respondents is divided into two groups A minority,
73 respondents or 12.3%, are involved in finance or a finance-related field, while the vast majority, 521 respondents making up 87.7%, are classified as 'Others', indicating a diverse range of professions outside the financial sector
Table 4.6 Occupation of survey’s respondent
Finance or relevant to finance
Table 4.7 examines the respondents’ adoption of digital services for spending, saving, or investing A significant majority, 391 respondents (65.8%), affirm using digital services for financial activities, showing a strong inclination towards digital financial management Meanwhile, 203 respondents (34.2%) indicate they do not use such services
Table 4.7: Possible using digital services of survey’s respondents
Use digital services for spending, saving or investing
Frequency Percent Valid Percent Cummulative
Table 4.8 shows the top 4 most apps used for Saving, Spending, and Investment that we obtained from our survey It can be clearly seen that the majority of participants, 151 in total, utilized Internet Banking, accounting for 25.4% About 15.2% of respondents used Momo apps while the number of Shopee Pay used is 42, constituting 7.1%
Table 4.8: Application that survey’s respondents usually use
Table 4.9 Financial Literacy of survey’s respondents
Financial literacy Frequency Percent Valid
Suppose you have 1 million VND and a bank's interest rate is
4% per year If you deposit this money in the bank for 1 year, how much (the principal and interest earned) will you have in 1 year times
Which investment do you think is riskier in general when you buy a stock or equity
Never heard of “equity funds”
Suppose the annual interest rate of your bank is 5% and the inflation rate is 3%
If you deposit 1 million VND in the bank, after
1 year, how much will you be able to buy with the money?
More than you could buy a year ago
The same as you could buy a year ago
Less than you could buy a year ago
Analysis of financial literacy reveals substantial knowledge gaps among respondents Only 34.2% accurately calculated interest accumulation, while 40.8% recognized stocks' higher risk compared to equity funds However, 44.7% demonstrated a lack of awareness about common investment options, including stocks and equity funds This study highlights the need for enhancing financial education to empower individuals with essential knowledge for wise financial decision-making.
52 probed the concept of real interest rate against inflation Here, only 15% of respondents recognized that with an inflation rate of 3% and a bank interest rate of 5%, the actual purchasing power would decrease – a stark illustration of the misunderstanding surrounding inflation and its impact on savings An alarming 43.6% were unsure of the answer Collectively, these figures indicate an urgent need for enhanced financial education to bridge the knowledge gap and equip individuals with the tools for sound financial decision-making
This section describes characteristics of digital financial literacy, digital financial behavior, financial self-efficacy and financial well-being in Vietnam With most item means across these dimensions exceeding 3 on a scale, the findings suggest a moderate to high level of financial competence and confidence among respondents The consistency in these dimensions is further highlighted by the standard deviation ranging from 0.96 to 1.1, indicating that the variations in responses are minimal and suggesting a general consensus or uniform understanding among the surveyed individuals It points towards a population that appears to apply well to digital financial platforms but also exhibits healthy financial behaviors, a sense of financial self-efficacy, and a positive perception of financial well-being
Table 4.10 Descriptive statistic of digital financial literacy
Digital financial literacy Code Mean Std
I have a good understanding of digital payment products such as
I have a good understanding of product digital asset management
I have a good understanding of digital alternatives
I have a good understanding of digital insurance such as OPES, motorcycle insurance
I have a good understanding of customer rights and protection as well as the procedure to complain about the service from digital financial providers
I have experience in using the product and service of fintech for digital payment such as
I have experience in using products and services of fintech for financing (loan) and investment such as
I have experience in using the product and service of fintech for asset management
I have awareness about the potential of financial risk in using digital financial provider or fintech, such as the legality of the fintech provider, interest rate and transaction fee
I am aware of the potential risks associated with sharing personal and financial information online, such as phishing scams or identity theft
I have a good capability in managing financial activities through a digital platform such as managing the cost of using digital financial transactions
I have a good control on financial activities using digital platforms by evaluating the spending in the platforms
Table 4.11 Descriptive statistic of financial self-efficacy
Financial Self-Efficacy Code Mean Std
I confidence in my ability to manage my finances FSE1 3.185 0.960 1 5 1 5
I can stick to my spending plan when unexpected expenses aries
When faced with a financial challenge, I have a hard time figuring out a solution
Table 4.12 Descriptive statistic of spending behavior
Spending Behavior Code Mean Std
I have a preference to choose shopping using digital platforms
(Shoppee, lazada, etc.) than the conventional platform (traditional market, supermarket, mall, etc.)
I choose shopping using digital platforms for leisure and enjoyment
(electric, tuition fee, etc ) through digital payment
I have a routine shopping using e-commerce SPD4 3.372 0.993 1 5 1 5
Table 4.13 Descriptive statistic of digital saving behavior
Digital Saving Behavior Code Mean Std
I have perception of independent of financial management using digital financial platform for saving
I have a regular savings using digital financial products
I am satisfying for saving using digital financial products
I am comfortable with my current level of saving which fulfills unexpected expenses emergencies if will occur
Table 4.14 Descriptive statistic of investment behavior
Investment Behavior Code Mean Std
I buy bonds, stocks, mutual funds or long-term investment through investment application
I feel that investing using digital applications is quite safe to do, such as the security of money, data, and so on
I get optimal benefits by investing through digital investment application
Table 4.15 Descriptive statistic of financial well-being
Financial Well-being Code Mean Std
I can handle my major unexpected expenses FWB1 3.158 0.955 1 5 1 5
I am securing my financial future FWB2 3.299 0.928 1 5 1 5
I can enjoy life because of the way I am managing my money
I am concerned that the money I have or will save will not last in the long run
An evaluation of the measurement model
Researchers can evaluate measure reliability using item loadings, composite reliability (CR), average variance extracted (AVE), and discriminant validity of constructs using a measuring model
4.2.1 Assessing reliability of the constructs
Table 4.16 and Table 4.17 show a diagnostic test to determine the applicability of our measurement model by looking at reliability and convergent/discriminant validity criteria First, the factor loading for each item is likewise determined to be greater than 0.7 (Table 4.16) Cronbach's alpha values for all variables in the study (Digital Financial Literacy, Financial Self-Efficacy, Spending Behavior, Saving Behavior, Investment Behavior, and Financial Well-being) were above 0.70, suggesting their reliability The average variance extracted (AVE) for each construct exceeds 0.50, as required Additionally, all composite dependability (CR) values are better than 0.70, indicating high instrument reliability
DFL FSE FWB IV SV SPD
In the following section, we conduct a comprehensive assessment of the structural model, exploring the intricate relationships between digital financial literacy, various financial behaviors, self-efficacy, and their collective impact on an individual's financial well-being
Figure 4: Structural model Firstly, we will use The Variance Inflation Factor (VIF) analysis to underscores the absence of severe multicollinearity within the model's inner constructs Digital Financial Literacy (DFL) exhibits an exemplary lack of multicollinearity with Financial Self-Efficacy (FSE), as indicated by a VIF of 1.000, suggesting that these constructs are statistically independent within the model Additionally, DFL's predictive relationship with other variables such as Financial Well-being (FWB), Digital Investment Behavior (IV), Digital Saving Behavior (SB), and Digital Spending Behavior (SPD) demonstrates VIF values ranging from 1.784 to 2.862 These are below the conservative threshold of
5, indicating modest inter-variable correlation that does not compromise the model's integrity
Similarly, Financial Self-Efficacy's (FSE) relationship with FWB, IV, SB, and SPD presents VIF scores of 1.784 to 2.422 These values affirm that FSE contributes distinct explanatory information to the model, independent of the other variables examined Notably, Investment Behavior's (IV) influence on Financial Well-being (FWB) shows a VIF of 2.567, which reinforces the notion of IV's unique contribution to the predictive power of the model regarding FWB
However, attention is warranted for the relationships of SB -> FWB and SPD -> FWB, which possess the highest VIFs within the table at 4.376 and 3.361, respectively Although these values do not exceed the critical threshold of 5, they are indicative of a
62 stronger shared variance that could, in more conservative analyses, prompt further investigation or model adjustment
Table 4.19 starting with H1, where DFL predicts FWB directly, the beta value is 0.083, which is relatively low, suggesting a weak direct impact This is supported by a T statistic of 1.698 and a p-value of 0.089, which is above the conventional threshold of 0.05, thus the relationship is not considered statistically significant In contrast, H2 presents (β= 0.159; p= 0.000) This indicates a moderate and highly significant positive effect of DFL on FWB through digital saving behavior (SB), implying that individuals with higher digital financial literacy may have better saving habits, which in turn enhance their financial well-being For H3, (β =0.072), which is on the lower end, but the relationship is still statistically significant (p = 0.007) This suggests that while the effect of DFL on FWB through digital spending behavior (SPD) is weaker than through
63 digital saving behavior, it is still a notable path to consider The strongest beta value is seen in H4, where DFL impacts FWB through digital investment behavior (IV), with a beta of 0.195 The T statistic is 5.135, and the p-value is 0.000, indicating a strong and significant positive relationship This could imply that DFL importantly influences FWB by enabling individuals to make better investment decisions In H5, the path from DFL to financial self-efficacy (FSE) has an even stronger (β = 0.663), with a very high (T.648) and a p-value of 0.000, denoting a very strong and significant relationship This may suggest that DFL is a critical factor in enhancing one’s confidence in their financial abilities, which is a key element of FSE However, the beta for the path from FSE to FWB directly (H6) is only 0.055 with a T statistic of 1.057 and a p-value of 0.291, indicating that the direct effect of FSE on FWB is not significant This could mean that while FSE is related to FWB, it may not improve FWB when considered in isolation from other behaviors For the mediated relationships (H7 to H10), the beta values range from 0.037 to 0.110 H8 and H9 indicate significant paths (p-values of 0.001 and 0.005, respectively), suggesting that FSE contributes to FWB by improving digital saving and spending behaviors The path through investment behavior (H10) is also significant (p-value of 0.000) with a relatively strong beta of 0.110
Table 4.19: Results of testing hypothesis
All hypotheses are two tailed test; * p < 0.1; ** p < 0.05; *** p < 0.01
Table 4.20 illustrates the variable with the highest R-squared and adjusted R-squared values is Financial Well-Being (FWB), at 0.772 and 0.770 respectively, indicating that DFL has a substantial explanatory power over FWB This suggests that individuals with higher levels of DFL tend to have a greater sense of financial well-being Moreover, Financial Self-Efficacy (FSE) shows lower R-squared values of 0.439 and adjusted R- squared of 0.438, suggesting that while DFL has some influence over individuals' belief in their ability to exert control over their financial lives, it may not be the sole determinant of FSE This implies that other factors, possibly psychological or behavioral, also play significant roles in shaping financial self-efficacy In addition, Investment Behavior (IV) has an R-squared value of 0.522 and an adjusted R-squared value of 0.520, indicating a moderate relationship with DFL This could mean that a good understanding of digital financial tools helps individuals make better investment decisions Finally, Digital Saving Behavior (SB) and Spending Behavior (SPD) have similar R-squared values of 0.637 and 0.634 and adjusted R-squared values of 0.636 and 0.632, respectively These suggest that DFL is quite predictive of how individuals
Enhanced digital financial literacy empowers individuals to optimize their financial management It provides access to tools and information for budgeting, expense tracking, and investment opportunities By leveraging these resources, individuals can make informed decisions, saving more effectively and spending more judiciously, ultimately promoting financial well-being.
Table 4.20: R-square and R-square adjusted
We further analyze paths related to all variables as shown in Table 4.21 and Table 4.22
Notably significant paths include DFL's influence on FSE (p < 0.001), IV (p < 0.001),
SB (p < 0.001), and SPD (p < 0.001), all demonstrating strong relationships with high
T statistics Additionally, the paths from FSE to IV, SB, and SPD are significant with p-values of 0.000 Moreover, the pathways from IV to FWB, SB to FWB, and SPD to FWB are also statistically significant, indicating their important roles in influencing financial well-being Conversely, the direct path from DFL to FWB (p = 0.059) and from FSE to FWB (p = 0.267) are not statistically significant These nonsignificant paths suggest that while DFL and FSE are important components of financial literacy and behavior, their direct influence on financial well-being may not be as strong as when they work indirectly through behaviors like saving, spending, and investing
The results of testing hypotheses are presented in Table 4.22 We can conclude that the indirect effects of DFL on FWB via FSE in conjunction with IV, SB, and SPD are statistically significant, as indicated by the p-values being less than 0.05 This signifies the acceptance of the hypotheses related to these paths However, the path from DFL through FSE to FWB does not show a significant indirect effect, with a p-value of 0.299, suggesting that the hypothesis for this particular mediating relationship cannot be accepted The non-significant result for the pathway from DFL to FWB (p = 0.299) may indicate that without considering the mediating variables, DFL does not have a standalone impact on FWB However, when mediating factors such as financial self-
67 efficacy, digital investment behavior, digital saving behavior, and digital spending behavior are considered, the influence of DFL on FWB becomes significant
DFL-> FSE -> FWB 0.037 0.038 0.035 1.038 0.299 DFL -> FSE -> IV 0.188 0.187 0.041 4.585 0.000 DFL -> FSE -> SB 0.211 0.210 0.039 5.396 0.000 DFL -> FSE -> SPD 0.295 0.295 0.038 7.717 0.000 DFL -> FSE -> SB -> FWB 0.061 0.060 0.019 3.213 0.001 DFL -> FSE -> IV -> FWB 0.073 0.072 0.018 3.952 0.000 DFL -> FSE -> SPD -> FWB 0.050 0.049 0.018 2.829 0.004 DFL -> SPD -> FWB 0.072 0.072 0.027 2.685 0.007 DFL -> SB -> FWB 0.159 0.158 0.043 3.710 0.000 FSE -> SPD -> FWB 0.075 0.075 0.026 2.841 0.004 DFL -> IV -> FWB 0.195 0.195 0.038 5.135 0.000 FSE -> SB -> FWB 0.092 0.090 0.028 3.323 0.001 FSE -> IV -> FWB 0.110 0.109 0.026 4.223 0.000
Table 4.23 demonstrates the impact of independent value toward dependent value by using F - square factor, in which DFL has a great impact on FSE and SB with the F- square are relatively 0.784 and 0.470 Additionally, DFL also has a moderate impact on
IV, SPD with the result of 0.296 and 0.279 For the impact of DFL toward FWB, there is nearly no impact of DFL to FWB with the result of 0.010 For the FSE factor, the result shows that FSE has a moderate impact toward the SB and SPD factor with the f - square value of 0.156 and 0.304 However, it is also shown that FSE has a weak impact
68 on IV with the value of 0.094 The influence of FSE on FWB is nearly non-existent as the f - square value between these two variables is 0.006
Furthermore, the table also shows that there is a medium influence of Investment Behavior (IV) toward Financial Well - being with the result of 0.258 Additionally, there is a low impact of Digital Saving Behavior (SB) and Digital Spending Behavior (SPD) toward FWB with the outcome of 0.084 and 0.034
DISCUSSION, CONCLUSION, IMPLICATION, AND LIMITATION
Discussion and conclusion
This study investigated the impact of digital financial literacy on financial well-being: Evident in Vietnam The evidence presented in the analysis confirms the integral role
69 of digital financial literacy in enhancing financial well-being It is evident that through the mediation of financial self-efficacy, spending, and investment behaviors, digital financial literacy has a measurable and significant effect on the financial well-being of individuals
Firstly, the study revealed that DFL has a significant effect on FWB with mediation: digital saving, digital spending, digital investment behavior The result by Chavali et al
(2021), Iramani and Lutfi (2021), and Muhammad Arsalan et al (2021) also has the same result Improving DFL can increase access to mobile finance and lead to favorable financial behaviors, such as switching from informal to formal savings channels (Aron,
2018) Improvements in objective financial conditions are likely to result in improved financial well-being and hence contribute to life satisfaction (Netemeyer et al., 2017)
The analysis in this study revealed that while there are observable indirect effects of Digital Financial Literacy (DFL) on Financial Well-being (FWB) through Financial Self-Efficacy (FSE), the results were not statistically significant (p = 0.299) This suggests that, although there is a relationship between DFL and FSE that could potentially influence FWB, the strength of this pathway in our model did not reach the conventional levels of significance Supporting evidence from the literature indicates that financial literacy and self-efficacy are critical components of financial behavior, which can influence financial well-being For instance, research by (Arofah, 2019) found that financial literacy and self-efficacy have significant positive effects on financial behavior, implying a potential indirect impact on financial well-being (Arofah,
2019) Furthermore, Farrell et al (2015) reported that financial self-efficacy is a strong predictor of financial product holding, which is a determinant of financial well-being (Farrell et al., 2015)
The pathway from DFL to FSE and then to IV, as well as to SPD, appears to be predicated on the foundational knowledge that individuals possess regarding digital financial tools and platforms The acquisition of such knowledge seemingly enhances an individual’s confidence in their ability to make informed financial decisions, thereby augmenting their financial self-efficacy (Gosal & Nainggolan, 2023; Johann & Dewi,
2023) An elevation in FSE, which can be directly correlated with the proficiency of DFL, appears to foster a more strategic approach to investment behaviors Individuals with heightened financial self-efficacy are more likely to engage in behaviors that align with long-term financial stability and growth, eschewing short-term gratification in
70 favor of sustained economic security This echoes the sentiments posited by Rahayu et al (2022), who argue for the positive impact of DFL on both digital saving and digital investing behaviors
Individuals who are well-versed in digital financial tools and resources are more likely to develop a sense of self-assurance in their financial capabilities This confidence appears to translate into proactive saving behaviors, which is a key component of overall financial health and stability Our study contributes to the financial literacy discourse by highlighting the specific indirect effects that digital literacy can have through the mediating variable of digital saving behavior Consistent with the literature, our findings suggest that increased financial self-efficacy, fostered through digital financial literacy, is instrumental in promoting better saving habits, which is a vital determinant of financial well-being (Arofah, 2019; Setiawan et al., 2022)
Financial literacy plays a crucial role in financial well-being, with individuals' attitudes, behaviors, and self-efficacy directly influencing their financial health Knowledge and skills, though not directly impacting financial well-being, are key factors that contribute to improved financial decision-making Notably, digital financial literacy has emerged as a significant factor in enhancing financial behaviors and well-being, particularly among small and medium-sized businesses.
Digital financial literacy is paramount for Vietnam's financial well-being It enables the unbanked and underbanked to access financial services and participate in markets Policy efforts should prioritize enhancing financial education, particularly digital literacy, to foster financial inclusion and improve the financial health of Vietnamese citizens Financial self-efficacy mediates these effects, highlighting the importance of building confidence in personal finance management skills to navigate financial challenges effectively.
Implication
Digital financial literacy is crucial for individuals' financial well-being in the modern digital era It enhances financial self-efficacy, enabling individuals to make informed financial decisions and plan for the future It further influences digital spending, saving, and investment behaviors, promoting prudent financial management This study demonstrates the importance of digital financial literacy in empowering individuals, particularly in the rapidly evolving financial landscape, and highlights its role in shaping individuals' financial behaviors.
Similar future research is recommended that incorporates additional factors determining financial behavior, financial self-efficacy and financial well-being, such as cultural aspects and access to financial education resources To enhance generalizability, it is anticipated that the next set of studies will be expanded to include participants from other countries, leading to more comprehensive findings.
Limitation
This study has several limitations that warrant further investigation The sample was limited to Vietnam, so generalizing the results to other countries requires caution Additionally, due to limitations in studying the impact of domain factors (DF) on friend-with-benefit (FWB) relationships through friend-supporting enablers (FSE), the researchers were unable to delve深く掘り下げる fully into this aspect.
Male – Female Where are you living now?
In the ourskirts How old are you?
How much is your income monthly Below 5 million VND
From 5 million to 10 million VND From 10 million to 20 million VND From 20 million to 30 million VND Above 30 million VND
What is your education level High School
Undergraduate Postgraduate What is your occupation?
Finance or relevant to finance Others
Do you use digital services for spending, saving or investing?
What apps which you use for spending, saving, or investing frequently?
Momo, ShoppePay, ZaloPay, MoneyOi, Finhay, Tikop, Flin Credit, Spendee, Timo, PocketGuard, Internet Banking
I have a good understanding of digital payment products such as E-Debit, E- Credit, E-Money, Mobile/Internet Banking, E-wallet
(Setiawan, Effendi et al 2022); (Abdallah, Alsharif et al 2024)
I have a good understanding of product digital asset management
I have a good understanding of digital alternatives (DFK3)
I have a good understanding of digital insurance such as OPES, motorcycle insurance
I have a good understanding of customer rights and protection as well as the procedure to complain about the service from digital financial providers
I have experience in using the product and service of fintech for digital payment such as Momo, Zalo Pay, Shopee Pay, Internet Banking…
I have experience in using products and services of fintech for financing (loan) and investment such as Finhay, Momo, Viettel Pay,
I have experience in using the product and service of fintech for asset management
I have awareness about the potential of financial risk in using digital financial provider or fintech, such as the legality of the fintech provider, interest rate and transaction fee
I am aware of the potential risks associated with sharing personal and financial information online, such as phishing scams or identity theft
I have a good capability in managing financial activities through a digital platform such as managing the cost of using digital financial transactions
I have a good control on financial activities using digital platforms by evaluating the spending in the platforms
Suppose you have 1 million VND and a bank's interest rate is 4% peryear If you deposit this money in the bank for 1 year, how much (the principal and interest earned) will you have in 1 year times
1 Less than 1.04 million 2 Equal to 1.04 million 3 More than 1.04 Million
Which investment do you think is riskier in general when you buy a stock or equity funds?
1 Stocks 2 Equity funds 3 Never heard of "stocks" 4 Never heard of
"equity funds" 5 Never heard of either
Suppose the annual interest rate of your bank is 5% and the inflation rate is 3% If you deposit 1 million VND, after 1 year, how much will you be able to buy with the money?
1 More than you could buy a year ago
2 The same as you could buy a year ago
3 Less than you could buy a year ago
I confidence in my ability to manage my finances
I can stick to my spending plan when unexpected expenses aries
When faced with a financial challenge,
I have a hard time figuring out a solution
I have a preference to choose shopping using digital platform (Shoppee, lazada, etc.) than the conventional platform (traditional market, supermarket, mall, etc.)
I choose shopping using digital platforms for leisure and enjoyment
I pay my my bills (electric, tuition fee, etc ) through digital payment products
I have a routine shopping using e- commerce
I have perception of independent of financial management using digital financial platform for saving
(Setiawan, Effendi et al 2022); (Abdallah, Alsharif et al 2024)
I have a regular savings using digital financial products
I am satisfying for saving using digital financial products
I am comfortable with my current level of saving which fulfils unexpected expenses emergencies if will occur
I buy bonds, stocks, mutual funds or long-term investment through investment application
(Oquaye, Owusu et al 2020); (Furinto, Tamara et al 2023)
I feel that investing using digital applications is quite safe to do, such as the secruit of money, data, and so on
I get optimal benefits by investing through digital invenstment application
I can handle my a major unexpected expenses
I am securing my financial future
I can enjoy life because of the way I am managing my money
I am concerned that the money I have or will save will not last in the long run
Nhân tố nhân khẩu học
Giới tính của bạn là gì Nam – Nữ
Hiện tại bạn đang sống ở đâu?
- Ở ngoại thành Bạn bao nhiêu tuổi?
Thu nhập hang tháng của bạn?
- Từ 5 triệu đến 10 triệu VND
- Từ 10 triệu đến 20 triệu VND
- Từ 20 triệu đến 30 triệu VND
- Trên 30 triệu VND Trình độ học vấn của bạn
- Sau Đại học Nghề nghiệp của bạn
- Tài chính hoặc liên quan đén tài chính
Bạn có sử dụng dịch vụ điện tử cho chi tiêu, tiết kiệm hoặc đầu tư không?
78 Ứng dụng bạn thường xuyên sử dụng cho chi tiêu, tiết kiệm hoặc đầu tư:
Momo, ShoppePay, ZaloPay, MoneyOi, Finhay, Tikop, Flin Credit, Spendee, Timo, PocketGuard, Internet Banking
Kiến thức tài chính kỹ thuật số
Tôi hiểu rõ về các sản phẩm thanh toán kỹ thuật số như E-Debit, E-Credit, E-Money, Mobile/Internet Banking, Ví điện tử
(Setiawan, Effendi et al 2022); (Abdallah, Alsharif et al 2024)
Tôi có hiểu biết tốt về quản lý tài sản kỹ thuật số của sản phẩm
Tôi có hiểu biết tốt về các phương pháp thay thế kỹ thuật số.
Tôi hiểu rõ về bảo hiểm kỹ thuật số như opes, bảo hiểm xe máy
Tôi hiểu rõ về quyền và bảo vệ khách hàng cũng như thủ tục phàn nàn về dịch vụ từ các nhà cung cấp tài chính kỹ thuật số
Tôi có kinh nghiệm sử dụng sản phẩm và dịch vụ của fintech cho tài chính (vay vốn) và đầu tư như Finhay, Momo, Viettel Pay,…
Tôi có kinh nghiệm sử dụng sản phẩm và dịch vụ của ứng dụng công nghệ cho tài chính (vay vốn) và đầu tư như Finhay, Momo, Viettel Pay,
Tôi có kinh nghiệm sử dụng sản phẩm và dịch vụ của ứng dụng công nghệ tài chính cho quản lý tài sản.
Tôi có khả năng quản lý tốt các hoạt động tài chính thông qua nền tảng kỹ thuật số như quản lý chi phí sử dụng giao dịch tài chính kỹ thuật số.
Tôi có khả năng kiểm soát tốt các hoạt động tài chính sử dụng nền tảng kỹ thuật số bằng cách đánh giá chi tiêu trên các nền tảng.
Tôi có khả năng quản lý tốt các hoạt động tài chính thông qua nền tảng kỹ thuật số như quản lý chi phí sử dụng giao dịch tài chính kỹ thuật số.
Tôi có khả năng kiểm soát tốt các hoạt động tài chính sử dụng nền tảng kỹ thuật số bằng cách đánh giá chi tiêu trên các nền tảng.
Giả sử bạn có 1 triệu VND và lãi suất ngân hàng là 4% mỗi năm Nếu bạn gửi số tiền này vào ngân hàng trong 1 năm, bạn sẽ có bao nhiêu (gốc và lãi thu được) sau 1 năm?
1 Ít hơn 1.04 triệu VND 2 Bằng 1.04 triệu VND 3 Nhiều hơn 1.04 triệu VND
Theo bạn, đầu tư nào rủi ro hơn nói chung khi bạn mua cổ phiếu hoặc quỹ cổ phần?
1 Cổ phiếu 2 Quỹ cổ phần 3 Chưa bao giờ nghe về quỹ cổ phần 4 Chưa bao giờ nghe về cổ phiếu 5 Chưa bao giờ nghe về cả hai
Giả sử lãi suất hàng năm của ngân hàng bạn là 5% và tỷ lệ lạm phát là 3% Nếu bạn gửi 1 triệu VND vào ngân hàng, sau
1 năm, bạn sẽ có thể mua được bao nhiêu với số tiền đó?
1 Nhiều hơn bạn có thể mua một năm trước
2 Bằng với số bạn có thể mua một năm trước
3 Ít hơn bạn có thể mua một năm trước
Hiệu quả tự tài chính
Tôi tự tin vào khả năng quản lý tài chính của mình
Tôi có thể giữ vững kế hoạch chi tiêu khi có những chi phí không mong đợi xuất hiện.
Khi đối mặt với thách thức tài chính, tôi gặp khó khăn trong việc tìm ra giải pháp
Hành vi chi tiêu số
Tôi có xu hướng chọn mua sắm trên nền tảng số (Shoppee, Lazada, v.v.) hơn là nền tảng truyền thống (chợ truyền thống, siêu thị, trung tâm mua sắm, v.v.)
Tôi chọn mua sắm trên nền tảng số để giải trí và thư giãn
Tôi thanh toán hóa đơn của mình (điện, học phí, v.v.) thông qua sản phẩm thanh toán số
Tôi có thói quen mua sắm trực tuyến
Hành vi tiết kiệm số
Tôi có nhận thức về việc quản lý tài chính độc lập khi sử dụng nền tảng tài chính số để tiết kiệm
(Setiawan, Effendi et al 2022); (Abdallah, Alsharif et al 2024) Tôi có tiết kiệm định kỳ sử dụng sản phẩm tài chính số
Tôi hài lòng với việc tiết kiệm sử dụng sản phẩm tài chính số
Tôi thoải mái với mức tiết kiệm hiện tại của mình, đủ để đáp ứng các chi phí bất ngờ khẩn cấp nếu xảy ra
Hành vi đầu tư số
Tôi mua trái phiếu, cổ phiếu, quỹ tương hỗ hoặc đầu tư dài hạn thông qua ứng dụng đầu tư
(Oquaye, Owusu et al 2020); (Furinto, Tamara et al 2023) Tôi cảm thấy việc đầu tư sử dụng ứng dụng số khá an toàn, như bảo mật tiền, dữ liệu, v.v.
Tôi nhận được lợi ích tối ưu khi đầu tư thông qua ứng dụng đầu tư số
Tôi có thể xử lý các chi phí bất ngờ lớn (Oquaye, Owusu et al 2020) Tôi đang bảo vệ tương lai tài chính của mình
Tôi có thể tận hưởng cuộc sống nhờ cách tôi quản lý tiền bạc
Tôi lo lắng rằng số tiền tôi có hoặc sẽ tiết kiệm sẽ không tồn tại lâu dài
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