Digital financial services usage and subjective financial well-being: evidence from low-income households in Malaysia

Abstract

Purpose

The first objective of this study is to analyze whether financial behavior (FB), financial stress (FS), financial literacy (FINLIT) and the locus of control (LOC) influence subjective financial well-being (SFWB) among low-income households in Malaysia. The second objective is to investigate whether the use of digital financial services (DFS) moderates the influence of FB and FS, on SFWB.

Design/methodology/approach

Motivated by the literature on transformative service research (TRS), this study examines how the use of DFS impact SFWB among low-income households in Malaysia. Low-income households are chosen as they are more likely to be financially excluded and lack financial knowledge and skills. Using an interviewer-administered survey, trained enumerators collected data from 1,948 low-income households in Malaysia, selected using a two-stage sampling based on the National Household Sampling Frame obtained from the Department of Statistics Malaysia.

Findings

Results reveal that SFWB is positively influenced by FB and the LOC, and is negatively impacted by FS and FINLIT. The evidence shows that the use of DFS counterintuitively weakened the strength of the relationship between FB and SFWB, but effectively reduced the adverse effect of FS on SFWB.

Practical implications

To reverse the signs of relationship, financial services marketers need to identify the specific types of DFS that low-income households use in order to provide targeted marketing efforts and financial education to promote the use of DFS on a more holistic basis to increase financial well-being.

Originality/value

The findings of this study add to the body of knowledge deliberating on the opposing effects of technology on consumers' welfare and well-being. This study focuses on the lower-income stratum of Malaysian households as this group of the population is more likely to be financially excluded and have deficiencies in financial knowledge and skills. Findings of this study show that DFS use can actually diminish the positive impact of FB on SFWB while reducing the adverse effect of FS on SFWB.

Citation

Mahdzan, N.S., Sabri, M.F., Husniyah, A.R., Magli, A.S. and Chowdhury, N.T. (2023), "Digital financial services usage and subjective financial well-being: evidence from low-income households in Malaysia", International Journal of Bank Marketing, Vol. 41 No. 2, pp. 395-427. https://doi.org/10.1108/IJBM-06-2022-0226